Pensions Come Out Swinging on Board Composition

Keir Gumbs and David Martin are quoted in an Agenda article regarding the “Boardroom Accountability Project 2.0.” According to Gumbs, the companies that received the letter from the New York City Pension Funds as well as those that didn’t should understand that the issues outlined by NYC comptroller Scott Stringer reflect the current level of shareholder interest in diversity, which is “significant.” Gumbs says that these types of letters often precede changes in shareholder and company behavior. “In all cases, this is another step in a continuous dialogue investors have been having with companies about the desire to see enhanced diversity in boards of directors,” he says. “With that in mind, boards should use their engagement efforts to talk with investors about diversity, and do a better job explaining how they currently address diversity in the nomination process and, more broadly, how that may or may not lead to a different outcome a year from now in terms of disclosure.”

Martin notes that questions about board competency have always been important to boards, but each board has to decide the appropriate skills it needs based on individual companies’ needs. “It’s good to sit and say, ‘what are the genders, what are the ages and experiences,’ and then put it all together. And it’s fine to use checklists, graphs or matrices to help catalogue objective characteristics as a means of assessing numerical balances,” says Martin. “I am quite concerned, however, if the objective overall is for every company to have a matrix that someone else has decided is the right matrix to address collective competency.”