Companies should be transparent when it comes to executive compensation and ensure it is tightly tied to long-term performance. When a corporate board’s compensation committee fails to set responsible executive compensation levels, it is a warning sign that the board’s oversight of management is inadequate.
Comptroller DiNapoli and the Fund promote sound corporate governance practices at portfolio companies, including accountability in the boardroom, to protect the long-term value of the Fund’s investments. This includes supporting, through engagement or shareholder votes, issues such as proxy access, annual elections for all directors, and an independent board chair, and opposing practices such as classified stock structures. The Fund believes that efforts to improve companies’ governance protect investments, benefit performance, and reduce risk of reputational damage and potential litigation.
Political Spending & Lobbying Disclosure
Since the U.S. Supreme Court’s 2010 Citizens United ruling, Comptroller DiNapoli has prioritized seeking disclosure of corporate spending on politics and lobbying. Without proper disclosure of political and lobbying spending, shareholders cannot determine if their investment dollars are being spent in the company’s best interest or if that spending opens it to legal, reputational, and business risks. Since 2010, the Fund has filed 140 shareholder proposals on political spending and lobbying disclosure and has convinced 39 companies to adopt such disclosure.
Social Media and Cyber Risks
Companies’ increased reliance on electronic data, communications services, and public platforms to conduct business has increased security risks. A single data breach or high-profile content incident can put a company’s reputation in jeopardy or open it to legal liability. As an investor, the Fund has focused on ensuring companies are prepared for preventing and addressing the growth in significant cyber-related risks.
Execution Drugs and Opioids
The Fund believes that board-level oversight and governance reforms can play an important role in effectively addressing the control of drugs used in executions and the distribution of opioids. Comptroller DiNapoli and other institutional investors have urged pharmaceutical companies to impose controls to prevent their medicines from being used as execution drugs in order to mitigate legal or reputational harm. Additionally, the Fund has asked pharmaceutical companies involved with the manufacturing or distribution of opioids to address the potential financial, legal and reputational risks of their operations.