New York State Comptroller Calls Out 4 More Companies on Board Diversity

Common Retirement Fund has now filed shareholder demands against 33 businesses.

Gaming and Leisure Properties, New Residential Investment Corp., Sinclair Broadcast Group, and Trip Advisor are the latest batch of companies to feel New York State Comptroller Thomas P. DiNapoli’s wrath over what he sees as a lack of diversity.

DiNapoli, the sole trustee of the state’s $207.4 billion Common Retirement Fund, has filed shareholder proposals against the four businesses, demanding they improve the diversity on their boards.

“Research has shown that companies with diverse boards perform better,” DiNapoli said, adding that they otherwise face a competitive disadvantage. “And when companies fail to address shareholder concerns over lack of diversity, they demonstrate a lack of accountability.”

The four companies he named are part of a growing list, now 33, that the comptroller accuses of  board diversity shortfalls.

As a paradigm, he cited BlackRock’s suggestion of a two-women minimum for boards.  The Common Retirement Fund chief said he is “encouraged by signs of progress,” with women filling nearly one-third of new director openings in 2017, but dismayed as women and people of color account for “approximately 20% and 10.6% of S&P 1500 directorships, respectively.”

To DiNapoli, each board of directors should have a diversity progress report for shareholders by September. The New York fund specified inclusion across all areas, adding women and people of color in each candidate pool for new director nominees, and an update on how the companies are recognizing qualified women and people of color for their boards.

Other elements of the fund’s corporate diversity plan include proxy voting policy to oppose all incumbent board members at companies with no women directors. It has voted accordingly at 616 companies to date. In the case of businesses with only one woman on a board, the fund votes against the nominating committee members, which has happened at 450 companies so far.

DiNapoli wrote to more than 200 companies in the Russell 3000 Index that had no women directors in September. The letter warranted an explanation as to how the corporations would respond to investors inquiring the lack of diversity. Just 10 of the companies that responded have added at least one woman to their boards to date.

“We’ve put our portfolio companies on notice that we want them to be responsive and adopt best practices when it comes to the composition of their boards,” DiNapoli said.

The comptroller could not be reached for comment.

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