Five Facts About Boards of Directors at IPO Time

How do AVEO Pharmaceuticals, Zipcar and LinkedIn feel about corporate governance? For the answers, you’ll need to check out a new report by international law firm Wilson Sonsini Goodrich & Rosati. The firm analysed the 50 largest IPOs (by deal size) from January 2010 to June 2011. Here’s what they found about corporate governance and the board of directors, as reported by Corporate Secretary:

1. About the board: in the study, board sizes were from five to 10 directors, and most were ‘substantially independent’ by IPO time.

2. Board committees: 100 per cent of the companies surveyed, reports Corporate Secretary, had venture capitalists on their boards, and these board members were from firms that had invested in the company. The good news is that these members ‘were determined to become independent directors, notwithstanding their share ownership.’

3. Policies: Rigid corporate governance guidelines, codes of business conduct and related party transactions are among the trends emerging for boards in the IPO space.

4. Equity: not even half the companies in the survey had implemented an employee stock purchase plane tied to the IPO. Those that did, however, ‘frequently included an ‘evergreen’ provision, allowing shares to be automatically added to the available pool annually.’

5. Just say no: not a single company surveyed by Wilson Sonsini Goodrich & Rosati had a poison pill in place for the IPO, though other defensive measures were used.

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Source: Corporate Secretary

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