March 22, 2018

More on “Three Women on Every Board! That’s Progress?”

Recently, I blogged about a California bill that would require at least three women on boards. I’ve also mentioned that it’s sad that quotas are the only solution to a problem that would so easily be solved with common sense. But I do think we are at that stage. And I do worry that quotas will set the “high bar” for women on boards – which would just be plain dumb. A member sent in this note with a similar sentiment:

The chest thumping over how proud companies are to have 20% women directors is really getting to me. Perfectly smart people are just over the moon about having two women on an 11-member board – and they want to say it ten different times plus in a giant pie chart. I think we’ve kind of lost our minds.

Maybe the standards are just too low – or when investors say at least one or at least two, people are thinking that’s best practices. But they really should (and do) know better.

Specialty ISS Policies Push for 30% Diverse Board Composition

Here’s an excerpt from this blog from Davis Polk’s Ning Chiu:

ISS has updated its Socially Responsible Investing (SRI) and Catholic Faith-Based policies so that the proxy advisor will recommend against incumbent governance committee members under the SRI policy, and all incumbent board members under the Catholic Faith-Based policy, at boards that are not at least 30% diverse and include at least one woman and one ethnic minority. Given that only 24% of Russell 3000 boards have such composition, the policies are expected to result in a “substantial increase” in the number of negative recommendations for directors. At the current pace, S&P 500 boards are expected to reach 30% diversity by 2028, but not until 2037 for Russell 3000 companies.

State Street: May “Vote No” for Stewardship Principles Non-Compliance

Here’s the intro from this Ning Chiu blog:

The Chief Investment Officer of State Street Global Advisor (SSGA) has sent letters to board chairs and lead directors at S&P 500 companies requesting that they report on their compliance with the principles outlined by the Investor Stewardship Group (ISG). We previously discussed the ISG Corporate Governance Principles.

Starting this month, SSGA will review governance practices at those companies and seek to “proactively engage with companies to better understand the reasons for non-compliance.” If SSGA believes that companies are not adequately explaining their governance approaches, either publicly or through engagement, SSGA may hold the board accountable by voting against the independent chair, lead independent director or most senior independent director up for election.

State Street’s “Fearless Girl” Campaign: One Year Later

As noted in this State Street press release, 152 public companies that the firm reached out to – through either its voice or its vote – that previously had no women on their boards, now have at least one female board member. Hard to believe that there were companies that were ‘all male’ in this day & age…

Broc Romanek