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Attorney Scott Lesmes thinks that corporate disclosures about board diversity efforts are going to be a continued focus of institutional investors next year.

Lesmes, former chief legal officer for Allied Capital Corp. and now a partner at Morrison & Foerster in Washington, D.C., spoke Wednesday during the law firm's webcast on evolving corporate governance issues. The program was "designed to help corporate counsel navigate the changing landscape for the 2020 proxy season."

Lesmes, who also served as deputy general counsel and chief securities counsel for financial services company Fannie Mae, spoke of the gender diversity push by giant asset managers BlackRock and State Street Global Advisors, as well as by the New York City Comptroller Boardroom Accountability Project, and by states like California, which passed a law requiring women on boards of directors of public companies by the end of 2019.

"It remains a very significant topic for investors and will continue to be," he said.

He urged companies and their general counsel to engage with any investors who come to them asking about diversity efforts.

"They may want just a little disclosure about how you are thinking about gender diversity," he said. "Don't ignore them. They can have a lot of influence if not taken seriously."

Also in the webcast, Morrison & Foerster partner David Lynn described the significant drop-off in comment letters from staff at the U.S. Securities and Exchange Commission on companies' periodic reports, especially annual and quarterly financial reporting forms.

Lynn, who served as chief counsel of the SEC's division of corporation finance, where the staff has been "realigned," noted that comment letters had dropped from 14,000 in 2010 to only about 4,000 in 2018.

"The reports are still getting reviewed," he said, "but the chances of a comment letter being sent are reduced."

Lynn said the key areas of focus for SEC staff continue to be the use of non-GAAP accounting measures, along with questionable performance metrics and key performance indicators. The staff especially spots what it calls "individually tailored accounting principles," he said.

He explained that performance metrics and indicators tend to be ways a company can show growth outside the usual financial measures.

Lynn advised, "You have to have some discussion around how these operating metrics are calculated, how information is being used, why you believe it is important to investors, and how it translates into future revenue or net income."

Marty Dunn, senior counsel at the law firm and former deputy director and acting director of the SEC's division of corporation finance, discussed the upcoming "proxy plumbing" proposals.

The proposed rules, which are open for comment until Feb. 3, would change the process for shareholder proxy proposals.

Dunn outlined the various changes and how they could benefit public companies.

Other experts, such as Bruce Freed, president of the Center for Political Accountability, have disagreed, calling the proposed rules "a direct attack on shareholder democracy." Freed recently co-authored an op-ed piece in the Financial Times on why the proposals should be changed.

Two of the five SEC commissioners also have strongly criticized the proposed rules.