Comptroller Stringer and NYC Funds: Corporate America is Heeding Call to Increase Diversity and Inclusion at the Top

(New York, NY) – Twenty large companies enacted search policies requiring the consideration of women and racially and ethnically diverse candidates for new CEOs and board directors, according to the New York City Retirement Systems’ (NYCRS) 2020 Post-Season Report released today by New York City Comptroller Scott M. Stringer. The report also highlights other shareowner initiatives over the last year, including significant progress on work on gender pay equity, proxy access, greenhouse gas emissions, corporate political spending, and corporate governance and accountability.

“Diversity and inclusion are not merely buzzwords – they must be airtight commitments in corporate America.  At a time when so many companies, both large and small, are feeling the squeeze of our economic crisis, it’s more important than ever they expand diversity within their ranks. Since the launch of our nationwide campaign to challenge the status quo of director elections in corporate America, we have helped lay the groundwork for steady progress and we’re not letting up. As we navigate difficult times ahead, we need every voice to be present around the boardroom table. Those diverse voices make boards more accountable to their shareholders, yield better decision-making from the top, and improve business performance,” said New York City Comptroller Scott M. Stringer. “Increasing diversity and inclusion is critical for businesses to compete in these challenging times – and that success will continue to protect the retirement security of hundreds of thousands of our beneficiaries and retirees.”

The Comptroller’s Office, on behalf of most or all of NYCRS, submitted 54 shareowner proposals to 53 portfolio companies, reaching negotiated agreements on 36, or 60% percent, of the proposals, including:

• 20 companies — in response to the newly launched Boardroom 3.0 — enacted search policies requiring the consideration of women and racially/ethnically diverse candidates for new CEOs and board directors.

• Eight companies — in a continuation of the Boardroom Accountability Project 1.0 — agreed to enact or take the steps necessary to enact proxy access bylaws to facilitate the nomination of directors by long‐term investors; more than 650 U.S. companies of various sizes and sectors have now enacted proxy access bylaws since the fall 2014 launch of the Project.

• Five companies agreed to investigate and/or disclose whether a gender pay gap exists among their employees.

• Three companies agreed to adopt and disclose quantitative greenhouse gas reduction goals.

• One carbon‐intensive energy company agreed to provide board oversight and disclosure of corporate political spending.

• Three major pharmaceutical companies facing litigation that they either contributed to the Opioid Crisis or inflated insulin and/or HIV drug prices enacted reforms to strengthen corporate governance and accountability.

In response to initiatives led by TRS, NYCERS and BERS to address climate change risks:

• Seven of the 20 largest electric utilities in the U.S committed to achieve net zero greenhouse gas (GHG) emissions by 2050.

• Former Exxon CEO Lee Raymond stepped down from his role as lead “independent” director at JPMorgan Chase, the largest global lender and underwriter to the fossil fuel sector; the three systems had urged investors to oppose Raymond’s election to the board on the basis that he lacked the impartiality and climate competency to perform his lead director responsibilities.

The New York City Retirement Systems’ “Post-Season Report” provides an overview of shareowner initiatives, including company-specific outcomes, by the New York City Retirement Systems in 2020.

Highlights from the Post-Season Report include:

Board Accountability, Diversity and Independence 

In October 2019, the Comptroller and NYCRS launched Boardroom Accountability Project 3.0, their signature initiative for the 2020 proxy season, in order to boost gender and racial/ethnic diversity in both the C‐Suite and the corporate boardroom.  Boardroom Accountability 3.0 sought to obtain firm commitments for a diverse search process for board seats and to ensure that women and people of color are considered for the position of Chief Executive Officer (CEO).

It follows Boardroom Accountability Project 1.0, which sought to make boards more diverse, independent and climate competent by enacting proxy access bylaws to facilitate the nomination of directors by long‐term investors. Three empirical studies  have concluded that this Project increased shareowner value and environmental performance at targeted companies, and provided a tool to improve board diversity.

Boardroom Accountability Project 2.0 pioneered the “Board Matrix” format to provide disclosure of the race and gender as well as the skills and experience of public company board members.

Building on the “Rooney Rule” pioneered by the National Football League, the Comptroller, on behalf of NYCRS, launched Boardroom 3.0 by sending letters requesting enactment of CEO and board diversity search policies to 56 companies (predominantly in the S&P 500).  The NYCRS subsequently submitted shareowner proposals in 2021 to 21 companies that were unresponsive to the initial letter.

Gender Pay Equity  

NYCRS filed proposals at five insurance and healthcare companies and at technology giant Oracle, requesting that the companies identify and disclose whether a gender pay gap exists among their employees, and the measures being taken to eliminate any such pay disparities. Nationwide, women earn about 82 cents for every dollar earned by men. Furthermore, a 2016 report by Glassdoor found that the healthcare and insurance industries had some of the largest gender pay gaps — even when controlling for age, education, and years of experience. Oracle, in particular, was targeted as a result of a lawsuit filed by the U.S. Department of Labor alleging systematic discrimination against female and minority employees. All of the proposals also recommended that the companies review pay disparities based on race/ethnicity.

In response to the proposals, several of the insurance and healthcare companies took meaningful steps to determine whether they had a gender pay gap and to enhance disclosure in this area.

Mandatory Arbitration of Employment-Related Claims  

NYCRS submitted proposals to Alphabet, Google’s parent company, and Chipotle urging their respective boards of directors to adopt a policy that the companies will report on the use of mandatory arbitration of employment-related claims. The proposal requested that this report include the proportion of employees who are subject to such provisions and the number of employee-related arbitration claims initiated and decided in favor of each employee. The proposal at Chipotle received majority shareowner support.

COVID-19 Employee Health and Safety at Amazon 

In May 2020, Amazon disclosed its plans to spend approximately $4 billion in the second quarter on coronavirus-related expenses, including investments in personal protective equipment, higher wages for hourly employees, and its own COVID-19 testing capabilities. Media reports, however, indicated that over 50 Amazon facilities had confirmed cases of COVID-19. Many Amazon employees were reported to be fearful about coming to work, and concerned for their own safety as well as that of their families, their coworkers, and the customers and communities they serve. In a May 2020 joint letter with Dutch Pension fund APG, NYCRS called on the chair of Amazon’s Leadership Development and Compensation Committee to report on how this committee of independent directors was overseeing the progress of the company’s COVID-19 related initiatives.  The request sought to ensure that these investments produced outcomes beneficial for both employees and shareowners. The report also highlights other shareowner efforts over the last year, including calling on companies to disclose their EEO-1 policies, continuing progress on greenhouse gas reduction goals, and denouncing anti-competitive practices relating to insulin and HIV drug prices at Eli Lilly and Gilead.

Read the full report here.

Comptroller Stringer serves as the investment advisor to, and custodian and a trustee of, the New York City Retirement Systems. The New York City Retirement Systems are composed of the New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund and the Board of Education Retirement System.

In addition to Comptroller Stringer, the New York City Retirement Systems’ trustees are:

New York City Employees’ Retirement System (NYCERS): Mayor Bill de Blasio’s Representative, John Adler (Chair); New York City Public Advocate Jumaane Williams; Borough Presidents: Gale Brewer (Manhattan), Sharon Lee (Queens), Eric Adams (Brooklyn), James Oddo (Staten Island), and Ruben Diaz, Jr. (Bronx); Henry Garrido, Executive Director, District Council 37, AFSCME; Tony Utano, President Transport Workers Union Local 100; Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.

Teachers’ Retirement System (TRS): Mayor Bill de Blasio’s Appointee, John Adler; Chancellor’s Representative, Lindsey Oates, New York City Department of Education; Natalie Green Giles; and Debra Penny (Chair), Thomas Brown and David Kazansky, all of the United Federation of Teachers.

New York City Police Pension Fund (PPF): Mayor Bill de Blasio’s Representative, John Adler; Acting New York City Finance Commissioner Michael Hyman; New York City Police Commissioner Dermot F. Shea (Chair); Chris Monahan, Captains Endowment Association; Louis Turco, Lieutenants Benevolent Association; Edward D. Mullins, Sergeants Benevolent Association; Paul DiGiacomo, Detectives Endowment Association; and, Patrick Lynch, John Puglissi, Joseph Alejandro, and Anthony Cacioppo all of the Patrolmen’s Benevolent Association.

New York City Fire Pension Fund (Fire): Mayor Bill de Blasio’s Representative, John Adler; New York City Fire Commissioner Daniel A. Nigro (Chair); Acting New York City Finance Commissioner Michael Hyman;  Andrew Ansbro, President, Robert Eustace, Vice President, Edward Brown, Treasurer, and Eric Bischoff, Staten Island Representative and Chair, Uniformed Firefighters Association of Greater New York; Liam Guilfoyle, Captains’ Rep.; Paul Mannix, Chiefs’ Rep., and Jack Kielty, Lieutenants’ Rep., Uniformed Fire Officers Association; and, Peter Devita, Marine Engineers Association.

Board of Education Retirement System (BERS): Schools Chancellor Richard Carranza; Mayoral: Isaac Carmignami, Natalie Green Giles, Vanessa Leung, Gary Linnen, Lori Podvesker, Shannon Waite, Michael Kraft (Manhattan BP), Debrorah Dillingham (Queens BP), April Chapman (Brooklyn BP), Geneal Chacon (Bronx BP) and Peter Calandrella (Staten Island BP); Thomas C. Sheppard, Kathy Park Price, Natalie Green Giles, Russell Buckley, Chris Attianese, Shaun D. Francois; and employee members John Maderich of the IUOE Local 891 and Donald Nesbit of District Council 37, Local 372.

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