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IN-DEPTH: White & Case on its expansion to a tri-continental shareholder engagement practice
This article first appeared on Diligent Market Intelligence's Activism newswire. To register for a demonstration and trial of the product, click here. Earlier this year, White & Case expanded its team to become a tri-continental shareholder engagement practice. Below, DMI discusses the evolving global activism landscape in the U.S., Europe and Asia with New York-based partner Richard Brand, London-based partner Tom Matthews and Tokyo-based partner Nels Hansen, who lead the U.S., U.K./Europe and Asia practices, respectively. What is the importance of having the first tri-continental shareholder activism practice? Richard Brand: Governance practices have evolved differently in different jurisdictions, but our clients, regardless of where they sit, are investing globally. By having a coordinated, strategic approach to advising investors around the world, we can leverage our experience in different jurisdictions for the benefit of our clients, while providing seamless service that is calibrated to the unique goals and considerations of clients we regularly work with. Do you see U.S. activists targeting U.K. and Japanese companies in even greater numbers? Tom Matthews: U.S. activists have been responsible for some of the highest profile campaigns in the U.K. market in recent years and we anticipate this trend continuing in the coming years. Nels Hansen: We have seen some U.S. activists approaching Japanese companies, but there is a learning curve and only a handful have been repeat players here to date. How about the reverse - foreign activists targeting U.S. companies? TM: European and other foreign activists have historically conducted relatively few campaigns in the U.S. market. Our experience allows us to guide investors through the complex U.S. regulatory landscape, but there remain practical obstacles for investors seeking to enter the U.S. market (not least the cost of acquiring and holding a meaningful stake in listed U.S. companies, many of which have much larger market capitalizations than companies in other markets). With the recent SEC guidance on 13D reporting, is the bar now even higher for institutional investors to back activists? RB: The large passive funds have become more supportive of management in recent years, and there has been a divergence in voting behavior between the actively managed and the passive funds in contested situations, which cannot be explained solely by different interests or investment time horizons. The recent SEC guidance puts a spotlight on the important role that passive investors play in determining the outcomes of proxy contests and complicates efforts for both sides to engage with them. Could that mean activists are more likely to aim for settlements? TM: It is possible that reduced certainty as to where other investors stand may in some situations add to the desirability of a settlement, depending on how market participants ultimately react to the new guidance. In any event, we have been seeing a trend across the globe over the past few years towards increased private engagement and settlement between activists and companies, and we anticipate this trend continuing. Are "white knight" transactions always a defensive move or an endorsement of the need for activists? RB: “White knight” transactions are still few and far between and can be extremely risky for a company to attempt, because, if viewed as primarily a defensive measure, they can generate support for an activist across the rest of the investor base and lead to the very outcome that the transaction was designed to help avoid – the loss of a proxy contest. While more U.S funds are said to be broadening their horizons to look for new opportunities in Europe, how are they adapting their engagement style? TM: U.S. funds pursuing activism campaigns in the U.K. and Europe encounter a significantly less litigious environment, where campaigns are largely conducted through private and public engagement and in some cases proxy contests, with court involvement being much rarer. With a relatively low share ownership threshold for requisitioning ad hoc shareholder meetings in the U.K. and Europe, there is also significantly less emphasis on an annual proxy season. What challenges do they face in certain European jurisdictions? TM: Each European jurisdiction has its own legal, regulatory and cultural framework that impacts how best to conduct an activist campaign to maximize chances of success. In this context, some of the major markets in continental Europe are notably less straightforward to implement activism campaigns compared with the U.K. For example, the dual tier governance structure in Germany (with separate supervisory and management boards), as well as the division between the respective competences of shareholders and the board, can make it more difficult for an activist to bring about desired changes without a negotiated settlement. In the Asia market, regulators have become more accepting of activism. Could that possibly change as we see more activists operating in the region? NH: Regulators have a diverse array of stakeholders and opinions. In each market there is always a lobby of companies who oppose shareholders telling management what to do, and Asia is no exception. This lobby’s ability to hamstring shareholder activism and engagement varies based on a number of factors, but more activism can mean more companies who have a score to settle. It can also mean more success stories of companies that have been positively transformed with attendant benefits for the economy. We will see whether asset owners – including pension funds responsible for the livelihood of a growing portion of the population across aging Asia – are able to prevent such actions by aggrieved corporates in the years to come. Board independence and qualifications are seen as key challenges in the Asia region. What are investors pushing for in this regard and what roadblocks are they facing? NH: Investors have a concern that board members are serving the CEOs to receive a cash salary, and not the shareholders. Some investors ask to compensate board members in stock. Some investors ask for board members to be found by executive search firms rather than friends of the CEO, or to have real executive experience rather than being a professor, accountant or lawyer. Roadblocks vary but a big one in many boards is that CEOs are happy with boards they and their friends chose.
The role of the nom/gov committee
In a recent survey of nominating/governance (nom/gov) committee chairs, 77% said board composition and succession planning were their top priorities. Yet, board evaluations, director onboarding and environmental, social and governance (ESG) oversight also ranked among their top five focus areas. This suggests that the scope of a nom/gov committee can easily be ill-defined. Companies can form their own rules and practices, which is a good thing because it allows them to customize their practices according to the company's needs. However, this can also overextend the nom/gov committee and blur the lines around their responsibilities. Ultimately, the efforts of the nominating and governance committee should strongly contribute to the quality of the board and its other board committees. Here, we’ll explain: The responsibilities of the nom/gov committee Why nom/gov committees matter more than ever Best practices for a high-impact nom/gov committee Frequently asked questions about the role of the nom/gov committee What are the responsibilities of the nom/gov committee? A 2024 Blue Ribbon Commission report highlighted several forces shaping the future of the boardroom, many of which fall under the nom/gov committee’s purview. In particular, the report highlights that innovation is outpacing board member experience, and strategy timelines are increasingly fast-paced. Cultivating the right mix of board member skills, such as technology proficiency, is an essential responsibility of modern nom/gov committees, but it’s not the only one. The nom/gov committee is responsible for: 1. Board composition Nom/gov committees lead the effort to build a strong, diverse and capable board. Together, they will identify gaps in expertise or representation, cultivate prospective board members and recommend individuals for election or reappointment. “A nom/gov chair starts with a discussion about what culture do we want to have, what culture do we want to have in the organization, and how does that get reflected in the top of the board,” says Evelyn Dilsaver, board member at Tempur-Sealy, QuidelOrtho and Health Equity. Nominating and governance committees should coordinate their efforts on director recruitment with existing board discussions related to the company’s strategy, board evaluations and succession planning. The board’s future needs may well be different from its current needs, making it important to consider the types of skills that future boards will need to run a successful company. As a result, the committee’s work should ensure all candidates share the organization’s mission and values and possess the skills to guide the organization into the future. 2. Board development and evaluation To keep the board engaging and high-performing, the committee oversees both orientation for new members and ongoing education for the full board. It also facilitates regular assessments to help the board reflect on its effectiveness and identify areas for growth. “A nom/gov chair really has to start with, ‘Where is the board? Where is the company?’ because not all companies are really ready for a culture assessment. Some don’t do board assessments of either the committees or the individuals,” says Dilsaver. Annual self-evaluations are a valuable part of this process, as peer evaluations are. The results will indicate whether the board’s composition is moving in the right direction or whether some changes need to be made. “At an individual level, it helps to understand what the values are that you’re looking for from a board member so you can understand whether they’re meeting it or not,” says Dilsaver. Regular evaluations may also indicate that the board needs to change its orientation or training and development. 3. Governance oversight As boards recognize the importance of working harder on board composition and succession planning, these priorities can dominate the nominating committee’s expectations. However, the nom/gov committee also holds the organization’s governance framework. It’s up to this committee to review bylaws, board policies and governance practices, taking steps to keep them up to date and reflective of legal requirements and best practices. The committee also monitors board compliance with ethical standards, including conflict-of-interest policies, and works to uphold a culture of integrity and accountability. 4. Leadership succession planning The committee spearheads transition planning for the board and other company leadership. It will identify and prepare future leaders for key roles such as board chair, vice chair and committee chair. Some organizations also charge the nom/gov committee with assisting in CEO succession planning, making it essential to the organization’s long-term stability. This latter responsibility — filling the CEO role — can be challenging and precarious for nom/gov committees, primarily if the existing CEO is still employed. There are obvious sensitivities with which to contend. The importance of the position also places much concern over getting it right because of fears of failure. For these reasons, nominating and governance committees must closely monitor risks and opportunities. Some companies practice giving the board an annual presentation of the top talent to help the board assess whether the top candidates are developing at the proper rate to be considered for the position of CEO. In assessing talent, the committee needs to evaluate whether candidates are ready now, what they need, and whether they can be prepared for the future. The committee may also decide to move a candidate into a different position so they can gain the necessary skills to put them in a CEO contender position. Ultimately, nominating and governance committees should examine the market and within the company to identify four or five candidates for the CEO position. 5. Board and leadership cultivation and recruitment The corporate markets are undergoing more change than ever before in their history. In their quest for the best candidates, committees must identify gaps in skills in the current and future boards. This step requires them to look at a wider pool of candidates. A skills matrix is a valuable tool to help identify longer-term and emergency successors. Boards may opt to look for board director candidates who have specific skills and other skills across a broad range of issues. Personal attributes, such as their character and whether they’ll fit in well with the dynamics of the rest of the board, are also valid considerations. “It’s worth writing it down on paper so that when you do interview somebody, you can say, ‘Here’s our culture,’” says Dilsaver. Board directors need to be team players. Diversity is a major component of good corporate governance. In addition to looking at skill sets, boards should find some balance within their board director ranks that considers gender, ethnicity and international diversity if the companies work across different markets. Another consideration that many committees overlook is seeking potential in candidates who haven’t served on a board of directors before. They may have the skills to perform a stellar job with the help of a mentor. Headhunters are another resource that committees can use to look for candidates outside their purview. When using headhunters, be unambiguous in what you ask for. Challenge the representative to look beyond the usual cast of board director candidates. If boards need specific skill sets, an alternative is for committees to set up an advisory board so they can access niche skill sets. 6. Committee structure and performance The nom/gov committee is often the board’s lead committee. It will evaluate the structure, role and effectiveness of all board committees. Boards look to this committee for recommendations on committee assignments that align with members’ strengths and interests and suggestions to either form or dissolve committees based on the organization’s strategic priorities. This oversight isn’t absolute, however. With no regulatory trigger for nominating committee requirements, boards are left to manage these tasks on their own. The lack of regulatory requirements also means that boards should clarify what they expect from their nominating and governance committees, including their activities and the processes to carry them out. For example, boards may set up the charter for their nominating and governance committees to manage board director succession planning, senior management succession planning and more. Why the nom/gov committee matters more than ever Nom/gov committees once focused squarely on board nominations and bylaws. However, in recent years, the committee has steadily evolved into one of the most influential committees in corporate governance. As stakeholder, regulatory and public scrutiny mount, it’s the nom/gov committee’s oversight that can keep boards focused, effective and responsible. This shift has not only elevated the committee’s profile but also introduced responsibility over high-impact areas like: Diversity and inclusion in the boardroom: Whether board composition reflects a broad range of backgrounds, perspectives and lived experiences comes down to the nom/gov committee. Board independence: The committee also reinforces structures and practices that reduce conflicts of interest and strengthen oversight. Environmental, social and governance (ESG) and proxy voting: Nom/gov committees guide board-level engagement on ESG matters, including how the organization responds to shareholder concerns. Accountability and long-term strategy: It aligns governance practices with sustainable growth and transparent leadership to solidify the organization’s standing over time. Best practices for a high-impact nom/gov committee The best nom/gov committees embrace their role as strategic partners to the board. Here are several best practices nom/gov committees can use to boost their profile — and their effectiveness. Align board composition with strategic needs: Schindlinger believes "A board should reflect where the company wants to be 3-5 years in the future, not just where it is today." The nom/gov committees are responsible for regularly assessing the board’s collective skills and experience in relation to the organization’s strategy. Identifying gaps in expertise or experience that the strategy requires is a sign to fill them during board recruitment. Prioritize quality over quantity in board reporting: The nom/gov committee has many responsibilities, so they may need to report to the broader board often. Instead, improve the clarity, relevance and usability of the information you share with the board. Think more about providing information that can drive better decisions rather than increasing the information you share. Drive ongoing board education and development: There’s a common misconception that once a member is on the board, they already know everything they need to. However, the reality is more nuanced. The most effective committees implement structured onboarding and ongoing education to prepare board members for new risks and opportunities that aren’t already part of their skill set. Take a long-term approach to succession planning: Think of succession planning as a marathon, not a sprint. Your goal is to build a robust talent pipeline over time so you don’t scramble to fill board vacancies. This makes board management software a valuable tool in all nominating and governance committee activities. A board portal offers a secure platform for storing and sharing resumes. Committee members can make notes and annotations directly on the resumes and choose to share their comments or not. The portal will also help them keep track of which board terms are ending so they can plan for it ahead of time. Engage with shareholders and other stakeholders: Nom/gov committees are traditionally inward-facing. However, with the rise in shareholder activism, it can be powerful for nom/gov committees to support the board’s external engagement on ESG, proxy matters and investors’ governance expectations. Doing so can cultivate trust in the board and show that it takes its fiduciary duty seriously. Build a nom/gov committee that fuels lasting success As the nom/gov committee's scope expands, so does the need for streamlined workflows, timely insights and secure collaboration. While what they oversee makes the nom/gov committee essential, it’s how they operate that makes them invaluable. A dedicated board portal can simplify governance processes, centralize key documents and ensure your committee members have the right information at the right time. Diligent Boards, part of the Diligent One Platform, is purpose-built for good governance: Automate board and committee meeting creation Summarize key insights and flag risks with AI-powered governance tools Protect sensitive committee data with best-in-class encryption and controlled access Easily collect and analyze board evaluations Find, recruit and connect with board and executive leadership Discover Diligent Boards or request a demo to see more features that modernize governance. FAQs What is a nom/gov committee? The nominating and governance (nom/gov) committee is a standing board committee responsible for identifying and vetting board candidates, overseeing governance policies and practices and guiding board structure, performance and succession planning. As board responsibilities have expanded, so has the scope of the nom/gov committee, making it a key driver of strategic oversight, ethical leadership and board diversity. How is the nom/gov committee different from other board committees? Unlike audit or finance committees, which focus on organizational performance and compliance, the nom/gov committee focuses on the board itself — its composition, effectiveness and alignment with governance best practices. It ensures that the board has the right mix of skills, structures, and policies to govern effectively in a changing environment. What should be included in a nom/gov committee charter? A strong nom/gov committee charter should clearly define the committee’s responsibilities, including board recruitment and nominations, governance policy oversight, board evaluations, succession planning, committee structure review and board education. It should also outline membership requirements, meeting frequency and reporting obligations to the full board. Does every board need a nominating and governance committee? While not legally required, most high-functioning boards — especially in corporate, nonprofit, and healthcare sectors — establish a nom/gov committee to ensure consistent and accountable governance. For smaller boards, these responsibilities may be handled by the full board, but having a dedicated committee ensures focused attention on long-term board health and leadership continuity. Who typically serves on the nom/gov committee? Nom/gov committees are typically composed of independent, experienced board members trusted to exercise sound judgment, strategic thinking and discretion. Many boards also aim to include members with governance, legal or leadership development expertise. The committee chair is critical in setting the committee’s tone and direction. How does the nom/gov committee support board diversity? The nom/gov committee plays a central role in advancing board diversity by embedding DEI into every stage of recruitment and evaluation. This includes setting inclusive criteria for board roles, expanding candidate pipelines, using blind or competency-based assessments and fostering a board culture that values diverse perspectives and lived experiences. What are the red flags that a nom/gov committee isn’t working? Warning signs of an underperforming nom/gov committee include: A stagnant or homogenous board with unaddressed skill gaps Irregular or vague succession planning Outdated governance policies or charters Infrequent board evaluations or no follow-up on results Lack of attention to board culture, ethics, or DEI Poor documentation and unclear reporting to the full board If these issues persist, it may be time to revisit the committee’s charter, membership, or support tools.
