Newly updated proxy voting guidelines from the prominent asset management firm BlackRock can provide the health system governance committee with a useful and informed perspective on trends in boardroom practices.
The voting guidelines are intended to set forth how BlackRock makes proxy voting decisions, and to share its views about corporate governance. The 2018 guidelines contain a series of elements that may be noteworthy to hospitals and health systems.
These include (i) a more stringent view on director independence; (ii) failure to exercise oversight with regards to accounting practices or audit oversight; (iii) the role of the compensation committee in periods when executive compensation appears excessive when compared to peers; and (iv) the performance of the governance committee chair where the board is not composed of a majority of independent directors.
Other important positions include: (v) periodic board refreshment (while not opposed to long-tenured director service); (vi) the importance of diversity in director selection, and a preference for "at least two women on every board"; (vii) expanded clawback provisions applicable to senior executives; (viii) limiting outside directors to service on no more than four boards; (ix) limiting the CEO to service on one other board; and (x) a "robust" CEO and senior management succession planning process.
BlackRock's status as an asset manager notwithstanding, it maintains a highly sophisticated perspective on corporate governance. For that reason, and because its perspectives are often predictors of what may become more established principles, the BlackRock guidelines should be of interest to the health system governance committee.
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