Chesapeake Utilities: Collaboration is key to governance success

Chesapeake Utilities Corporation is the winner of this year’s governance team of the year (small to mid-cap) award. Under the leadership of director Stacie Roberts, the team has been instrumental in keeping up with best practices even as Chesapeake has undergone rapid growth, with its market capitalization increasing by more than 400 percent over the last decade.

To achieve this, the governance team has expanded its roles and responsibilities into areas such as strategic business transactions, cyber-security and risk management. As such, it has been a key player in helping Chesapeake respond to the challenges faced by larger public companies when it comes to corporate governance, the regulatory environment, compliance and risk management.

In 2017, for instance, the corporate governance team began executing its operational plan to visit the company’s business units and departments in order to engage in one-on-one dialogue about team collaboration and further enhancement of practices.

Indeed, Roberts tells Corporate Secretary that such collaboration with other departments is a key ingredient in a successful governance team.

For example, most publicly held companies will from 2018 have to include in their proxy statements a ratio comparing the CEO’s compensation to that of the ‘median employee’. The question of how to deal with the complexities of the rule and the many different options for determining the pay ratio has caused headaches for many companies.

In response to this, the Chesapeake governance team in late 2016 led several meetings in collaboration with the company’s HR and strategic development units to help with implementation of the new SEC pay ratio rule. ‘We have a very family-oriented culture,’ Roberts says of this approach to dealing with the issue.

Over the awards review period, the team enhanced board and committee evaluation forms and supported the enhancement of the board’s evaluation process to include one-on-one interviews with each director. Although all public companies conduct reviews each year, Chesapeake’s governance team likes to stay up to date on the process and not view it simply as an annual event, Roberts says.

In addition, her team supported the corporate governance committee’s efforts regarding its discussions on board composition and board succession, including providing an analysis of best practices benchmarked against peer companies, the S&P 500 and the top 100 US public companies.

Among other things, the team helped implement the company’s move from a three-year to a one-year say-on-pay cycle; analyzed director stock ownership and retention guidelines, looking at peer analyses and a pro forma of ownership; and began rewriting the 2018 proxy statement with plain-English language and a clear and comprehensive overview of the company’s practices.

This article originally appeared in the Winter issue of Corporate Secretary.