Rhode Island Treasurer, Hedge Fund Get Board Diversity Pledge from Telecom

The charge is that directors at $30 billion SBA Communications do not meet the 30% diversity criteria.

The Rhode Island General Treasurer and Trillium Asset Management secured a board diversity commitment from a $30 billion telecommunications company, the pension plan leader and hedge fund said Thursday. 

SBA Communications has agreed to a shareholder proposal to expand disclosures regarding diversity in its nine-member corporate board. It said it will also publish an index that measures skills against gender, race, and ethnicity to assess candidates before appointing new directors. 

“A growing body of research shows that companies with stronger diversity at the senior level tend to outperform those companies that lack diverse leadership teams,” Rhode Island General Treasurer Seth Magaziner said in a statement.

“As long-term investors, we are pleased that SBA made good-faith efforts to engage with investors and strengthen its board governance and disclosure practices,” he added. 

SBA Communications did not respond to requests for comment. 

At SBA, just two out of the nine members on the board are women, including one female director who was appointed only in December. Prior to her appointment, there were only eight members. 

Those numbers come up short for Rhode Island, as more institutional investors push for diversity on corporate boards. The state pension system has a policy to vote against nominees if the board will not be at least 30% diverse.

Other state treasurers demanding diversity in corporate governance include the ones in Connecticut, Maine, Massachusetts, New York, and Vermont. All are part of a group called the Northeast Investors’ Diversity Initiative. 

Shareholder proposals from pensions frequently come under fire, with critics saying the measures are ineffectual in setting targets for companies. For example, setting a figure for the number of diverse directors on a board. 

But others argue that the type of requests shareholders can make to companies are restricted by securities regulations, which limit proposals that might be obstructive to the “ordinary business” of the company. Proponents say that it’s better to remain actively engaged with companies to effect change. 

Every company in the S&P 500 now has appointed at least one female director to its corporate board. But the state pension system and hedge fund argue that changes have yet to trickle down to companies in the Russell 3000. About one-fifth of businesses have all-male boards. SBA is a member of the S&P 500.

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