Troy McHenry, executive vice president, general counsel, and corporate secretary at HCP, Inc. (NYSE: HCP), participated in a video interview at Nareit’s REITwise: 2019 Law, Accounting & Finance Conference in San Antonio.
He said that institutional investors are not putting pressure on companies to adopt age or term limits, and companies are slow to adopt board refreshment and diversity measures as a result.
“There’s a catalyst of change coming from states like California,” McHenry said. “[This is] not a topic that you’re going to see going away.” He said that given the sensitive nature of the topic, board diversity measures are best addressed initially by the CEO and chairman, with input on regulations and trends from the general counsel.
“At HCP, we’re a proponent of these changes. We’ve found [that] having an age or term limit policy in place makes a difficult conversation a little less difficult,” he added. McHenry said that HCP’s new age limit policy will result in three female directors out of seven this year.
McHenry said that proactive shareholder engagement and outreach is an effective tool for REIT general counsel. He advised having an annual plan noting which investors to target.
McHenry also said he believes the legal department may be the best-suited place for ESG reporting since it is responsible for general disclosure, including the annual report, proxy statement, and securities and investor relations disclosures. And, since ESG disclosure surveys are also typically very technical, he said the legal department is best suited to aid with that interpretation.