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  • Doug Chia

Thoughts on The Challenge (and the answers!)

You've now seen Parts I and II of The Soundboard Governance Challenge: 80 acronyms commonly-used by corporate governance and ESG professionals in both formal and informal conversations (and probably in their sleep). By all accounts, it was tough challenge. Nobody got all 80. Not even close. But, we all know that tests like this one are not IQ tests. It's like being good at JEOPARDY!, spelling bees or the old grade school vocab pop-quiz. These are tests of your powers of verbal memorization, not intelligence or ability to apply concepts to complex problems. They often correlate, but for a myriad of reasons. So, what's the point of this exercise?


The point is: In today's world, being a corporate governance professional will expose you to an incredibly broad range of subject matter areas. It means you will be pulled into meetings that require you to be at least somewhat fluent in each of those subject. Increasingly, that includes board meetings.


Some of these are areas that until 15-20 years ago were seen as adjacent to corporate governance, but still with more than a stone's throw of separation. I remember internal conversations about whether the corporate secretary should "own" sustainability and whether it even belonged in the legal department, as opposed to environmental health and safety, procurement or public affairs. The same went for compliance before the compliance profession grew exponentially as a result of Sarbanes-Oxley and Dodd-Frank. Law and compliance could be friends, but they shouldn't date.

And back then, ESG wan't even a thing yet. Now, corporate governance professionals are drinking ESG from a firehose and probably will be for the foreseeable future. Just attend any corporate governance conference. It's all ESG, all the time. I used to receive a daily overdose of client alerts and benchmarking reports on executive compensation. ESG has taken its place. I got some puzzled reactions from the corporate governance set when we changed the name of The Conference Board's Governance Center to the "ESG Center." Were we changing our focus from "actual" corporate governance to the squishy world of ESG, where special interest groups are able to fit any pet issue under that three-letter umbrella? My response was that the move was strategic. The "G" stands for governance, and ESG is where investors are heading, so we're positioning ourselves to get ahead of the trend.


To illustrate just how broad the scope of a corporate governance professional's job has become, I've grouped all 80 of the acronyms in The Challenge under subject matter headings. I never imagined coming out of law school that my second language would look like this!


Corporate Laws

· Delaware General Corporation Law (DGCL)

· Model Business Corporation Act (MBCA)

· Sarbanes-Oxley Act of 2002 (SOX)


Corporate Governance

· Annual General Meeting (AGM)

· Institutional Investor Services (ISS)

· Interfaith Center on Corporate Responsibility (ICCR)

· International Corporate Governance Network (ICGN)

· Investor Responsibility Research Center Institute (IRRCi)

· National Association of Corporate Directors (NACD)

· Virtual Shareholder Meeting (VSM)


Institutional Investors

· California Public Employees' Retirement System (CalPERS)

· California State Teachers' Retirement System (CalSTRS)

· Council of Institutional Investors (CII)

· Investor Relations (IR)

· Investor Stewardship Group (ISG)

· Socially Responsible Investing (SRI)

· State Street Global Advisors (SSGA)


Securities Regulation

· American Depositary Receipt (ADR)

· Initial Public Offering (IPO)

· Electronic Data Gathering, Analysis and Retrieval (EDGAR)

· eXtensible Business Reporting Language (XBRL)

· Long-Term Stock Exchange (LTSE)

· New York Stock Exchange (NYSE)

· Over-The-Counter (OTC)

· Principal Executive Officer (PEO)

· Securities and Exchange Commission (SEC)

· Securities and Exchange Commission Investor Advisory Committee (SEC IAC)

· Self-Regulatory Organization (SRO)

· Well-Known Seasoned Issuer (WKSI)

Accounting

· Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

· Earnings Per Share (EPS)

· Financial Accounting Standards Board (FASB)

· Generally Accepted Accounting Principles (GAAP)

· International Financial Reporting Standards (IFRS)

· Public Company Accounting Oversight Board (PCAOB)

· Total Shareholder Return (TSR)

Compensation and Benefits

· Defined Benefit Plan (DBP)

· Defined Contribution Plan (DCP)

· Direct Stock Purchase Plan (DSPP)

· Dividend Reinvestment Plan (DRIP)

· Employee Retirement Income Security Act of 1974 (ERISA)

· Employee Stock Option Plan (ESOP)

· Employee Stock Purchase Plan (ESPP)

· Incentive Stock Option (ISO)

· Long-Term Incentive Plan (LTIP)

· Named Executive Officer (NEO)

· Performance Share Unit (PSU)

· Restricted Share Unit (RSU)

· Supplemental Executive Retirement Plan (SERP)


Stock Transfer and Proxy Voting

· Deposit/Withdrawal At Custodian (DWAC)

· Depository Trust Company (DTC)

· Non-Objecting Beneficial Owner (NOBO)

· Objecting Beneficial Owner (OBO)

· Voter Information Form (VIF)


Financial Services Industry

· Assets Under Management (AUM)

· Chartered Financial Analyst (CFA)

· Financial Industry Regulatory Authority (FINRA)

· Financial Stability Board (FSB)

· Global Industry Classification Standard (GICS)

· Morgan Stanley Capital International (MSCI)

· Securities Industry and Financial Markets Association (SIFMA)


Risk and Compliance

· Committee of Sponsoring Organizations of the Treadway Commission (COSO)

· Enterprise Risk Management (ERM)

· Foreign Corrupt Practices Act of 1977 (FCPA)

Sustainability Practices and Reporting

· Dow Jones Sustainability Index (DJSI)

· Global Reporting Initiative (GRI)

· Sustainability Accounting Standards Board (SASB)

· United Nations Global Compact (UN GC)

· United Nations Sustainable Development Goals (UN SDG)

ESG Practices and Reporting

· Carbon Disclosure Project (CDP)

· Climate Disclosure Standards Board (CDSB)

· Corporate Social Responsibility (CSR)

· Environmental, Social and Governance (ESG)

· Integrated Reporting (IR)

· International Integrated Reporting Council (IIRC)

· Task Force on Climate-related Financial Disclosures (TCFD)

· United Nations Principles for Responsible Investing (UN PRI)


Other Corporate

· Business Roundtable (BRT)

· Chief Information Security Officer (CISO)

· International Organization for Standardization (ISO)

· Organization for Economic Co-operation and Development (OECD)

· World Economic Forum International Business Council (WEF IBC)








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