Comptroller Stringer, NYC Funds: Unprecedented Disclosure of Corporate Boardroom Diversity Following Groundbreaking Campaign
June 27, 2018
Launched in September, Boardroom Accountability Project 2.0 is the second phase of the Comptroller’s initiative to diversify insular and homogeneous corporate boards
Dozens of major U.S. public companies embrace Stringer-proposed “matrix” and related transparency on board quality and diversity
(New York, NY) — New York City Comptroller Scott M. Stringer and the New York City Pension Funds today announced that after less than a year, the groundbreaking “Boardroom Accountability Project 2.0” (BAP 2.0) campaign, an initiative which pushes for greater corporate board diversity and transparency reforms, has accomplished unprecedented engagement with more than half of the 151 major U.S. companies targeted. The announcement reflects the growing momentum for greater transparency and diversity from often insular and homogenous boardrooms.
In the campaign’s launch last September, Comptroller Stringer and the NYC Funds wrote to 151 public companies in the Funds’ portfolios – 80 percent of which are in the S&P 500 – calling for the disclosure of a board “matrix,” a table describing the skills, gender and race/ethnicity of individual directors on the board; and engagement with independent directors regarding “refreshment” opportunities to bring new voices and viewpoints into the boardroom.
Since then, over 85 companies have adopted improved processes and increased transparency regarding board quality, diversity and refreshment, and over 35 companies are now disclosing not only the qualifications of their board members, but also details on boardroom gender and racial/ethnic diversity – information which up-to-now was rarely made public.
BAP 2.0 targets the underlying reasons for the persistent lack of diversity on corporate boards such as the obscure nature of board nominations and elections, which can appear like coronations of existing boards, locking out women and people of color – despite growing evidence that diverse groups make better business decisions. At S&P 500 companies, for example, just 21% of board members in 2016 were women, 7% were African American, 3% were Hispanic, and 3% were Asian.
The new disclosures in BAP 2.0 and our office’s corporate engagement are changing boardroom culture, both of which are leading companies to cast a wider net for directors without sacrificing quality. This initiative is ultimately expanding board diversity and laying the groundwork to deliver sustainable long-term value for investors. In fact, since the launch of BAP 2.0, 49 targeted companies have elected 59 new directors who bring new viewpoints and diverse voices to the boardroom; and 24 targeted companies have now publicly committed to include women and people of color in the candidate pool for every board search going forward.
“With this phase of the Boardroom Accountability Project, we’re setting out to make tangible changes and overhaul corporate boardrooms across the country. But when we first launched, we heard every reason why it couldn’t happen. Today, less than a year later, we’re already seeing a turning point in boardroom culture, and our momentum for demanding higher board quality, transparency and deeper diversity is only building,” said New York City Comptroller Scott M. Stringer. “This is not just about changing the who’s who on corporate boards – this is about setting the best foundation for future generations and enshrining the highest standards for our investments. Diverse, climate-competent, and independent boards are best positioned to protect our retirees’ pensions for the long term and that’s why we’ll keep the pressure on for real change in corporate boardrooms.”
Additional achievements generated by this latest phase of the Boardroom Accountability Project include:
- Approximately 80 percent of the 151 targeted companies responded to the Comptroller’s Boardroom Accountability Project 2.0 letters;
- Since September, the Comptroller’s Office has substantively engaged with management teams at over 85 of the 151 companies targeted in the campaign, including dozens of directors;
- Over 35 companies are now disclosing not only board members qualifications and skills, but also details concerning both gender and racial/ethnic diversity on the board;
- Since the launch of the BAP 2.0 in September, 49 targeted companies have elected 59 new directors who identify as a woman or person of color – including 44 women, 15 African Americans, four Hispanic Americans, and two Asian Americans;
- Additionally, 24 companies have publicly committed to include women and people of color in the candidate pool for every board search going forward; and
- Over 25 companies provided meaningful disclosure about their annual board evaluation processes to ensure that their directors – individually and in the aggregate – remain of the highest quality and their boards are refreshed on an ongoing basis.
“These issues are too important to ignore. There is simply no excuse for companies to hide information about who is sitting around their boardroom tables and not to embrace the highest board quality and diversity for their companies and their investors. We will continue to demand these changes, because they create sustainable long-term value for our pension funds and for all investors,” said Comptroller Stringer.
As a supplement to the BAP 2.0 letter, the New York City Pension Funds submitted shareholder proposals to six of the targeted companies requesting that they provide a directors’ matrix, a table documenting boardroom composition with information on individual board member skills and attributes, such as gender and race/ethnicity. The proposals were withdrawn from five companies that agreed to satisfactory meaningful disclosure. Of the six companies where the shareholder proposals were submitted, Exxon Mobil was the only one that refused to adopt such disclosure.
When the proxy access campaign began, just six U.S. companies embraced the reform. Now, the number of companies with meaningful proxy access has grown over 8,600 percent since 2015. Today, more than 520 U.S. companies have adopted meaningful proxy access, including over 65 percent of the S&P 500 and over 140 of the companies targeted for boardroom disclosure in the second phase of this project.
To view a list of targeted companies in Boardroom Accountability 2.0, click here.
For an example of a board matrix, click here.
To read more about Proxy Access, click here.
Comptroller Stringer serves as the investment advisor to, and custodian and a trustee of, the New York City Pension Funds. The New York City Pension Funds are composed of the New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Pension Fund and the Board of Education Retirement System.In addition to Comptroller Stringer, the New York City Pension Funds’ trustees are:
New York City Employees’ Retirement System: Mayor Bill de Blasio’s Representative, John Adler (Chair); New York City Public Advocate Letitia James; Borough Presidents: Gale Brewer (Manhattan), Melinda Katz (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: Mayor Bill de Blasio’s Appointee, John Adler (Chair); Raymond Orlando, representing the Chairperson of the Panel for Educational Policy and Debra Penny, Thomas Brown and David Kazansky, all of the United Federation of Teachers.
New York City Police Pension Fund: Mayor Bill de Blasio’s Representative, John Adler; New York City Finance Commissioner Jacques Jiha; New York City Police Commissioner James P. O’Neill (Chair); Patrick Lynch, Patrolmen’s Benevolent Association; Michael Palladino, Detectives Endowment Association; Edward D. Mullins, Sergeants Benevolent Association; Louis Turco, Lieutenants Benevolent Association; and, Roy T. Richter, Captains Endowment Association.
New York City Fire Pension Fund: Mayor Bill de Blasio’s Representative, John Adler; New York City Fire Commissioner Daniel A. Nigro (Chair); New York City Finance Commissioner Jacques Jiha; Gerard Fitzgerald, President, LeRoy McGinnis, Vice President, Edward Brown, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; John Farina, 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: Schools Chancellor Richard Carranza; Mayoral: Isaac Carmignani, Jose Davila, Vanessa Leung, Gary Linnen, Lori Podvesker, Benjamin Shuldiner, Shannon Waite, Miguelina Zorilla-Aristy; Michael Kraft (Manhattan BP), Debra Dillingham (Queens BP), Geneal Chacon (Bronx BP), April Chapman (Brooklyn BP), and Peter Calandrella (Staten Island BP); and employee members John Maderich of the IUOE Local 891 and Donald Nesbit of District Council 37, Local 372.
To read an overview of Boardroom Accountability Project 2.0, click here.