Pay Equity, Impeachment Among Top Concerns for Directors and General Counsel in 2020
"We do try to address topical items directed toward directors, but we believe a primary component of readership are general counsel, as the board's trusted advisers," said Kerry Berchem, a partner in the New York office of Akin Gump Strauss Hauer & Feld.
January 07, 2020 at 03:00 PM
4 minute read
When her law firm developed a report on the top topics of concern to boards of directors in 2020, Kerry Berchem knew a key audience would be general counsel as well.
"We do try to address topical items directed toward directors, but we believe a primary component of readership are general counsel, as the board's trusted advisers," said Berchem, a partner in the New York office of Akin Gump Strauss Hauer & Feld.
She knows about the general counsel role because Berchem also serves as outside general counsel to several public companies, including U.S. Concrete Inc.; WMIH Corp., which holds the legacy reinsurance business of Washington Mutual Inc.; and Greenlight Capital Re, a Cayman Islands reinsurance company.
On Tuesday she discussed the just-released "Top 10 Topics for Directors in 2020" with Corporate Counsel. Here are excerpts of that conversation, edited for clarity and brevity.
Corporate Counsel: Why do you think the report is significant for general counsel?
Kerry Berchem: I've been working with boards for 30 years, and each year I see more cause for boards to become better educated. The legal landscape is never static—a changing judiciary, disparate legal environment, shifting social norms, economic disparity, generation divides and more. General counsel in large part are the reason that boards are more involved and better understand the issues. They are the informed educators, the trusted advisers who help the boards prioritize.
CC: Several of the topics deal with somewhat related human resource issues such as board diversity, pay equity, the #MeToo movement, and the Rooney rule [which requires that at least one woman and one underrepresented minority be considered in the slate of candidates for an open position]. What is the general counsel's role on these issues?
KB: Sometimes the general counsel is the human resources department, or HR reports to the general counsel. Sometimes it's hard to get a board to focus on these issues outside of a proxy resolution. We [Akin Gump] try to present the economic view rather than the moral view, that inclusion provides a competitive advantage to companies. There's data supporting that.
The general counsel can have a conversation about it with the board, explaining, for example, why diversity leads to better company decision-making. The conversation typically will start with a nomination and governance committee.
CC: Another topic is corporate reputation. How does a general counsel become involved in that?
KB: We live in a Google and Twitter world, and everybody can find what's out there. The general counsel needs to be assessing the electronic presence of the company, what's online about the company.
The general counsel must assess, mitigate and prioritize risk, including risk to reputation. To do that, you have to know what the risks are. Not everything has to be raised at the board level, but you need to know.
CC: The report also includes election and impeachment on the top 10 list. How do those relate to the general counsel?
KB: If it were written today it might also include the prospect of a pending war. The type, size and scope of the business will determine whether there is a significant impact. A defense contractor, for example, will be impacted by any war. Some political candidates like Elizabeth Warren or Bernie Sanders want to have an impact on financial services if elected. A general counsel needs to be informed about how any changes can affect the company, how the company can respond to changes and how to assess any risks.
CC: Is there any one topic that jumps out at you as one to watch in 2020?
KB: Pay equity. I think that's going to be the hot topic this year. [Former Delaware Supreme Court Chief Justice] Leo Strine has spoken a lot about this.
Boards face a Delaware law that prioritizes shareholder return versus doing what is best for the employee base. Inequities are increasingly being brought to the forefront. The legal landscape is shifting as state and federal lawmakers continue to introduce legislation to reduce pay inequities.
Boards are walking a tightrope. I think pay equity will become a broad conversation in this country, and general counsel should be aware.
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