Comptroller Stringer, NYC Funds Expand Campaign to Diversify Recruitment of Senior Executives at America’s Largest Companies

(New York, NY) – Today, New York City Comptroller Scott M. Stringer, on behalf of the New York City Employees’ Retirement System, Teachers Retirement System of the City of New York and New York City Board of Education Retirement System (the “Systems”), announced a new set of proposals as part of Boardroom Accountability Project 3.0 – a first-in-the-nation initiative calling on companies to adopt a policy requiring the consideration of both women and people of color when hiring their most senior executives, a version of the “Rooney Rule” pioneered by the National Football League (NFL). As part of Boardroom Accountability Project 3.0, Comptroller Stringer submitted proposals to four S&P 500 companies that lack any apparent racial and ethnic diversity among the most senior ranks of their top executives.

“As a pension system, we want to invest in 21st century companies that represent the future – not companies with management teams that look like they’re out of the 1950s,” said New York City Comptroller Scott M. Stringer. “In 2020, there’s simply no excuse for everyone in the C-Suite to look the same. Companies are strongest when their boardrooms and C-suites reflect the diversity that is America, and our push to increase diversity at all levels of the nation’s largest corporations has yielded historic results. I’m confident that our efforts will continue to open the doors of the C-suite for women and people of color and create long-term shareholder value for the more than 700,000 active and retired City workers who rely on the Systems for their retirement security.”

Comptroller Stringer and the participating systems filed shareholder proposals at American Airlines, Dell Technologies, The Kroger Company and The TJX Companies. The four proposals will go to a vote at the companies’ 2021 annual shareholder meetings. The Comptroller expects to submit proposals to additional companies in the coming months.

To read a sample of the latest proposal, click here.

Boardroom Accountability Project 

In October 2019, Comptroller Stringer launched the third stage of the groundbreaking Boardroom Accountability Project with a new first-in-the-nation initiative calling on companies to adopt a policy requiring the consideration of both women and people of color for every open board seat and for CEO appointments. The initiative was the latest step in the Comptroller’s Boardroom Accountability Project, a campaign launched in 2014 which seeks to make boards more diverse, independent, and climate competent. Its first phase kicked off the unprecedented market-wide adoption of “Proxy Access” – a shareholder right – from just 6 companies to more than 600 companies today, while the second phase pioneered the “Board Matrix” method for disclosing details about company board directors. Comptroller Stringer’s 3.0 initiative sought to make meaningful, long-lasting, and structural change in the market practice so that women and people of color are welcomed in the door and considered for every open director seat as well as when hiring CEOs and other top executives.

At the launch of the initiative last year, Comptroller Stringer sent a letter to 56 S&P 500 companies, including Expedia, Hilton Worldwide Holdings and Con Edison that, regardless of the current diversity of their board or CEO, do not currently have a Rooney Rule policy for director searches – and subsequently filed shareholder proposals at those companies that lacked any apparent racial diversity at the highest levels. A number of other major companies had a Rooney Rule policy governing board member searches, but not CEO searches.

The Comptroller’s proposed policy was based on the “Rooney Rule” in the NFL, which requires teams to interview minority candidates for head coaching, general manager jobs and equivalent front office positions. Comptroller Stringer’s call included gender and racial/ethnic diversity, and was the first time a large institutional investor had called for this structural reform for both new board directors and CEOs.

In April 2020, Comptroller Stringer announced the first successful results of this initiative by negotiating pioneering Board and CEO diversity search policies with 13 leading companies. The Boards at each of these companies had approved, and publicly disclosed, policies requiring the consideration of qualified women and racially/ethnically diverse candidates for director and external CEO searches. Many of the policies included explicit provisions that the Board will instruct any search firms they retain to include such individuals in their initial list or pool of candidates. Constructive engagement and the responsiveness exhibited by these companies led to the prompt withdrawal of the NYCRS’ shareholder proposals. Since then the total has increased to at least 23 companies that have recognized the need for action and enacted similar policies for CEO searches. In addition, one company has established a policy requiring diverse pools in searches for Section 16 officers, including the CEO.

The persistent lack of diversity in the business world is especially stark at the top. As of 2018, 66 percent of board members at Fortune 500 companies were white men. Another 17.9 percent were white women, followed by 11.5 percent men of color and 4.6 percent women of color. When it comes to executive leadership, as of May 2019, 6.6% percent of Fortune 500 CEOs are women, and there are similarly low numbers of people of color leading those companies.

When a pool of candidates includes a woman or person of color, it changes the status quo. A 2016 study published by the Harvard Business Review found that the odds of hiring a woman were 79 times greater when there were at least two women in the finalist pool, and the odds of hiring a minority were a staggering 193 times greater when there were at least two minority candidates in the finalist pool.

A large and growing body of empirical research suggests a positive correlation between board diversity and performance. Research by McKinsey, for example, suggests that companies with greater gender and ethnic board diversity have stronger financial performance. Similarly, MSCI research suggests that gender diverse boards have fewer instances of bribery, corruption, and fraud. Diverse boards can better manage risk by avoiding “groupthink,” challenging assumptions, and cultivating creative solutions.

In addition to Comptroller Stringer, the participating 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), Donovan Richards (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.

Board of Education Retirement System (BERS): Schools Chancellor Richard Carranza; Mayoral: Isaac Carmignami, Natalie Green Giles, Eric C. Henry 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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