& Securities

Efforts to increase corporate board diversity are gaining steam, with companies now facing real consequences for failing to take meaningful action to address the issue. As recently reported in the Wall Street Journal,1 State Street Corp. followed through on its pledge to vote against Nominating/ Governance committee board members of companies that failed to increase the number of women on their boards, with an initial focus on 476 companies it identified as having no female board members. Of that group, State Street had productive conversations with 42 companies, the Wall Street Journal reported, but voted against the re-election of Nominating/Governance Committee members at 400 companies that “failed to make any significant effort to address the issue.” State Street’s efforts follow BlackRock Inc.’s announcement that it would engage companies to better understand their progress on improving diversity in the boardroom. Though it stopped short of pledging to vote against Nom/Gov Committee members, BlackRock stated that it would hold such committee members accountable for any lack of progress within a reasonable time frame.

While these institutional shareholders are ratcheting up the pressure on public companies, certain members of the US Congress have been pushing the SEC for greater board diversity disclosure. In March, Representative Carolyn Maloney (D-NY) reintroduced her Gender Diversity in Corporate Leadership Act (H.R. 1611),2 modeled on policies in Canada and Australia, which would instruct the SEC to recommend strategies for increasing women’s representation on corporate boards, and require companies to report their gender diversity policies as well as the proportion of women on their board and in senior executive leadership. In May, two letters were sent from members of the House of Representatives to SEC Chairman Clayton, urging him to continue his predecessor’s efforts toward requiring companies to provide more information on the diversity composition of their boards: Representatives Carolyn Maloney (D-NY) and Donald Beyer (D-VA) asked Chairman Clayton to consider the SEC staff’s review of the SEC’s existing proxy statement disclosure rules regarding the diversity of board nominees previously ordered by former SEC Chair White;3 and Representative Gregory Meeks (D-NY), along with 28 other Representatives, requested that Chairman Clayton go further by working on a rule proposal, and to share with Congress the status of the SEC staff’s review.4 In response to Representative Meeks’ letter, Chair Clayton committed to reviewing the staff’s work in this space and to monitor compliance with the existing rule.5

The push from Congress continues, as several House Representatives, led by Representative Meeks, are planning to host a Forum on Board Diversity in Washington, DC next month.