Council of Institutional Investors

Investor Expectations for Newly Public Companies

The Council of Institutional Investors (CII) has long maintained that companies wishing to tap the public markets should adopt an equity structure and governance provisions that protect public shareholders’ rights equally. A troubling number of companies enter the public markets with structures and practices that fundamentally compromise accountability to shareholders and entrench insiders, including:

  • multi-class equity structure with unequal voting rights
  • plurality vote requirement for uncontested director elections
  • non-independent board leadership, whether from the chair or lead director
  • classified board structure
  • super-majority vote requirement for bylaw amendments and other proposals

As newly public companies grow into mature, established firms, special protections for insiders and disparities between economic ownership and voting power become especially problematic. Upon going public, a company should have a “one share, one vote” structure, simple majority vote requirements, independent board leadership and a non-classified board. CII expects newly public companies without such provisions to commit to their adoption over a reasonably limited period through sunset mechanisms.