The New York City comptroller is calling for a move toward what he calls ‘board accountability 2.0,’ having written to 250 companies last year asking for information on board director selection criteria and what each board member brings to the table.
Scott Stringer told attendees at an industry event on Thursday that the New York City pension plan has heard back from 85 percent of the companies that received letters, and has conducted engagement with more than half of those companies – specifically advocating for greater disclosure around gender and ethnicity diversity.
‘We’ve told companies that it’s hard to evaluate their boards when their disclosure is inadequate,’ Stringer said at a Skytop Strategies conference on ESG. ‘They need to be more up front and we’re beginning to see some of the results now in 2018 proxies.’ Stringer and his team oversee the New York’s $160 billion public pension system.
Board diversity leads to better business performance and shareholder returns, Stringer said, citing PwC research in which 73 percent of board directors surveyed said diversity prompts better business practices.
Stringer pointed out that board diversity is increasingly a concern for public pension plans that are ‘interested in changing the course of history’ to move away from boards that are ‘all male, pale and stale.’
The campaign for public companies to adopt proxy access by-laws marked a ‘historic’ moment where public pension plans grouped together to force change and is a sign of things to come, Stringer said. Before the campaign, only six US public companies had proxy access by-laws. That number has increased to more than 500 companies, including 65 percent of the S&P 500.
‘Thanks to the work of the institutional investors, shareholders have a meaningful voice in director elections,’ Stringer said. ‘We believe these changes will help shatter ceilings for people across America. For too long, women and people of color who went to the right schools and did all of the right things…got on the elevator to the C-suite and it stopped in the middle of the ride. That’s why proxy access is a game changer.’
