Call to Action for companies to institute best practice policies in the director nominating process
Fort Washington, PA – Oct. 27, 2016 – Following its 5th Annual Summit on October 17 the Thirty Percent Coalition commends more than 100 companies that have added a woman to their board of directors following the Coalition’s landmark initiative, Adopt a Company Campaign, launched at the beginning of 2012. These companies include the results of state initiatives with regional companies by Coalition members California State Teachers' Retirement System (“CalSTRS”) (California) and UAW Retiree Medical Benefits Trust (Michigan).
The Thirty Percent Coalition has been successful in bringing together mutual, pension, and health funds representing more than $3 trillion in assets under management, along with a significant number of women’s groups across the US, to engage with companies in the S&P 500 and Russell 1000 who previously had no women on their boards. In addition, Coalition members have urged companies with inadequate racial diversity on its board to add people of color. The Coalition continues to press company management to consider additional women, even if the company has appointed one women to further expand the diversity of its board. The appointment of a woman, and in many instances a woman of color, was a first for most of these companies.
The Thirty Percent Coalition’s Institutional Investor Committee, co-chaired by Anne Sheehan, Director of Corporate Governance, CalSTRS and Timothy Smith, Senior Vice President at the Boston-based investment firm Walden Asset Management, are leading the Adopt a Company Initiative. The Coalition strongly supports the growing research evidence that diversity is good for business. The business case for diversity is evident in the rapidly changing demographic profile of the United States as well as the continuing rise in purchasing power of women and various ethnic/racial groups. Institutional Investors believe that diversity impacts its sustainable risk-adjusted returns and diversity improves the returns available to pay its obligations to beneficiaries.
This successful initiative inspires the Thirty Percent Coalition to continue its letter writing efforts to expand women representation on board of directors to increase board diversity. The letters are followed by conversations between shareholders and the companies. Shareholder resolutions are filed when the initial outreach is not providing the desired results. These resolutions often represent collaboration by several shareholders. They serve as powerful communication tools to the company, advocating that a gender diverse board is the right thing to do and contributes to positive long term shareholder value. This past proxy season 36 such resolutions were filed, the majority being withdrawn following successful conversations and collaboration with the companies.
“We are pleased and heartened to be making progress with our investor outreach, an initiative unique to the US and one that is proving to be increasingly successful,” said Anne Sheehan, co-chair of the Thirty Percent Coalition’s Institutional Investor Committee. “There is still much work to be done since the number of women on corporate boards still remains at unacceptable levels (only 19.9% for the S&P 500 in 2015). Nevertheless, we believe this active collaborative approach is making an identifiable difference,” continued Sheehan.
“The power of this initiative represents teamwork among the Coalition’s institutional investor members and a forward looking spirit as we work with those companies appointing a woman or minority to their boards for the first time. We appreciate the efforts made by these companies in response to concerns voiced by their investors and other stakeholders and congratulate them on this progress,” said Tim Smith, co-chair of the Thirty Percent Coalition’s Institutional Investor committee.
Following the Summit, the Thirty Percent Coalition also issued a “Call to Action” for the second year in a row for companies across the US to institute best practice policies in the director nominating process. Following the language outlined in shareholder resolutions being filed this proxy season, the Thirty Percent Coalition is asking companies to:
Strengthen Nominating and Corporate Governance policies by embedding a commitment to diversity inclusive of gender, race, ethnicity;
Include women and minority candidates in the initial list of candidates from which management-supported director nominees are chosen;
Consider, as appropriate, persons from both non-executive corporate positions and non-traditional environments such as government, academia, and non-profit organizations.
Report on progress and challenges experienced.