Remember Our Prediction That Board “Diversity” Will Have a Big Breakaway Year in 2017?
Just as we began this issue, we discovered, in a September 30 article on TheStreet.com by reporter Robert Orol that Diversity Measures on Corporate Boards had already had a “Breakout Year” – and that yes, 2017 will be a “Breakaway Year” for sure.
And it sure looks to us as if the few recalcitrant companies cited in the article – and especially those who failed to follow up on commitments made in order to forestall a shareholder proposal on diversity – will come in for a hellacious year.
In the 2016 season to date, shareholder proposals that ask boards to disclose their plans and programs to foster gender and other kinds of diversity on their boards are polling big numbers: A measure introduced by the New York State Common Retirement Fund at FleetCor Technologies Inc. received the backing of 72% of the vote at a June annual meeting, according to ISS Voting Analytics. A proposal at Joy Global Inc., in March, that was introduced by Amalgamated Bank, which is majority-owned by a labor union, gained the backing of 52% of the voting shares. “We have found of late that the companies have been incredibly responsive,” said Gianna McCarthy, co-director of corporate governance at the New York State Common Retirement Fund. Anne Sheehan, chief of corporate governance at CalSTRS notes that they will send private letters to corporate boards with no women directors, urging them to increase board diversity. Recently, she said, CalSTRS sent 125 letters to boards at California corporations that have no women directors, with 35 companies appointing female board members in response to the campaign, including Facebook Inc. – that subsequently added a couple women directors. CalSTRS submitted, and later withdrew a proposal it had submitted at Urban Outfitters Inc. in 2015, seeking to have the clothing chain prepare an annual report describing what steps, if any, its board or nomination committees had taken to include women and racial minorities to its boards after Urban Outfitters moved to appoint a second woman to its board. “The first woman brought on Urban Outfitters board was the wife of CEO Richard Hayne,” Sheehan said. “Really? You couldn’t find someone else?...They finally got the message.” Would we expect CalSTRS to expand the letter-writing to non-California-based companies in 2017? You betcha.
Last year, Wespath, a pension fund representing the United Methodist denomination worldwide, submitted non-binding shareholder proposals seeking to increase the diversity of the board of directors at Comcast Corp, Equifax Inc. and Simon Property Group. Comcast and Simon Property both added a second woman director to their boards after Wespath’s engagement. Equifax made a commitment to nominate a woman to its board by the May annual meeting, the article reported, but didn’t meet it. “The consumer credit reporting company committed to nominate a woman later in 2016 but in September, it nominated another male candidate,” the article noted. Do you think that someone will come after Equifax with guns blazing over being “stiffed”…or that Equifax would be dumb enough to continue to renege on its commitment?
“Perhaps more significant” the article noted, “is that nine companies allowed diversity proposals on their ballot to go to a vote in 2016, up from five in 2015 and three in 2014, according to ISS Corporate Solutions.” But really, we’d ask, “Why would a company not make a commitment to diversity – and act instead as if it is up for debate, and should really be put to a shareholder vote?”