Board diversity must be a priority for directors to gain proxy advisers' endorsement

Activist Insight's "Activism & Voting this week" newsletter includes a feature by Rebecca Sherratt, Corporate Governance Editor, discussing the focus on diverse representation on boards of the newly released Glass Lewis’ Proxy Voting Policies and the proposed ISS' proxy guidelines. These new policies should be welcomed by U. S. investors who have long been pushing for minimum requirements on ethnic and racial representation on boards akin to those currently expected of U.K.-listed boards.

“ISS and Glass Lewis have very much understood the significance of diversity in boards for the capital markets today,” said Mandy Offel, Manager, Corporate Governance at Morrow Sodali. “However, boards should be aware that it is not primarily proxy advisers driving this agenda. Instead, institutional investors are setting the standards which proxy advisers now try to reflect.”

“Companies should engage with their investors to identify what they consider their diversity priorities, which may range from equal pay to gender or ethnic diversity quotas for below-board management levels, respective considerations during succession planning, or transparent policies on inclusiveness and culture,” Offel said.

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