Signs and the art of disclosure

Signs and the art of disclosure

Signs and the art of disclosure

An interview with Laura Clayton McDonnell, board member at Zuora and SVP of sales at ServiceNow.

The role of a corporate board of directors, simply put, is to look after the interests of investors. But how the board doing this begins to shift.

We spoke with Laura Clayton McDonnell, ServiceNow Senior Vice President of Sales (East, Canada and Latin America) and current board member at Zuora, to talk about the value of transparency and accountability and how it affects investor behavior.

Q: You moved from securities law to a sales position. How do you think your legal background has shaped your opinion about how a board can or should function?

A: My legal background is helpful because securities laws regulate securities markets and protect investors. Boards of Directors exercise important legal duties of care, loyalty and obedience to serve the interests of investors. And ideally, the result is that investors are protected and have the information they need to make informed investments.

Q: So ideally they’re kind of like a nexus between the people who run a company and the people who invest in a company.

A right. The managers of a company run the company; they are the operators: hiring talent, developing products, driving go-to-market strategies, providing administrative services such as finance, IT, etc. Boards of directors play a supervisory role, overseeing the operations, assess performance and share appropriate information with investors.

For example, at ServiceNow, I operate a large sales territory and generate revenue from selling our solutions and supporting our customers. At Zuora, I sit on the other side of the exchange, where I evaluate financial performance, including revenue generated, represent shareholder perspectives, and comply with required disclosures.

Q: Would you say that role is changing now?

A: The role of a board of directors is still to guide companies in a way that protects investors. However, what definitely changes is that the general public cares more: how the money is earned.

People still want their investments to be profitable, but they increasingly want the assurance that their investments won’t subsidize environmental or social degradation, for example — and they’re showing a new level of willingness to divest if a company can’t act responsibly. demonstrate.

Thus, boards are under more pressure to drive ESG and DEI efforts and to ensure transparent disclosure of activities.

Q: How are boardrooms responding to the increasing call for ESG and DEI initiatives?

A: Well, boardrooms themselves aren’t quite out of the game when it comes to diversity and inclusion. But boards are under increasing pressure to review and disclose a company’s activities related to ESG and DEI. Investors are more willing to walk away if companies can’t justify themselves on those fronts. Today the public expects companies to do goodalong with doing good.

Q: And what does that mandate mean for people who sit on boards of directors of publicly traded companies?

A: At ServiceNow, I am confident that the board has played an active role in formulating our ESG policy. Companies must be accountable for greenhouse gas footprints, procurement and labor practices. Figuring out how a company is dealing with physical and social impacts, be it waste in their supply chain or a poor track record of inclusivity, and making recommendations accordingly, is increasingly a matter for the board.

This fits in with the supervisory role of a board member. When the company’s managers prepare a report on their DEI strategy, the board is responsible for ensuring that it is consistent with company policy.

Q: Do you think the SEC will eventually introduce corporate governance regulations?

A: The SEC has and will continue to issue regulations requiring disclosure by companies about how they operate. As the public demands more transparency in order to make informed decisions, the SEC has issued new rules, especially around the disclosure of the emissions footprint. It is conceivable that they extend those requirements to DEI, or other aspects of corporate social responsibility. Investors want to make money, but nobody wants the associative debt that comes with investing in companies that cause demonstrable damage.

Q: So it seems that both investors and the SEC are increasingly demanding that companies be accountable on ESG. Is that the primary concern for investors in general?

A: It’s an important one. The SEC will continue to require disclosures of material, relevant information and other factors that could affect a company’s performance, and those disclosures may change from time to time due to the dynamic nature of business. We have seen the rise of investors who want transparency about how companies are dealing with cybersecurity and risks such as finance, lawsuits, reputation, supply chain, etc. Concerns about current geopolitical and economic issues and their impact on companies are also increasing.

Disclosures provide benefits to investors, encourage valuable communications and increase trust. In times of uncertainty and critical to our economy, it is vital that they adapt to keep investors informed and protect their interests. And I’m lucky to be able to see that from multiple perspectives: as a lawyer, as a salesperson and as a board member.