Investors have a bit more information to go on these days as far as evaluating the diversity levels of boards, since the Securities and Exchange Commission approved late last year rules to enhance the information provided to shareholders.
Calvert Asset Management, a mutual-fund company that invests in socially responsible companies, has been leading the charge when it comes to board diversity, with its most recent victory, involving Netflix, announced yesterday. Along with Connecticut Retirement Plans and Trust Funds, Calvert reported the successful resolution of its efforts to promote board diversity at the entertainment distributor. Netflix, headquartered in Los Gatos, Calif., recently named its first female director, Ann Mathers, to its board.
The Securities and Exchange Commission rules are vague when it comes to defining the word “diversity,” but pretty much every proxy now at least mentions it. Yet while everyone agrees race and gender diversity are important, Henry Stoever, a spokesman for the National Association of Corporate Directors in Washington, stresses the importance of the board reflecting the skills that are needed to achieve a business’ strategy.
For now, employers can expect investors such as Calvert to continue to apply pressure. Aditi Mohapatra, sustainability analyst for the Bethesda, Md.-based company, reports that her firm has been issuing a steady stream of shareholder proposals on board diversity, roughly nine or 10 per year, since 2002. “We’ve been targeting the bottom of the bunch, those companies where we see a lack of commitment,” she says.
Nor is it alone in its efforts. “We’ve had seven or eight different firms file proposals with us,” Mohapatra points out.