board diversity

Diversity and Meritocracy

A few weeks ago a campaign supporter suggested that our messaging was off. He said we are alienating half of our audience by insisting on boardroom diversity. Instead, he said, board directors should be chosen by meritocracy, based on ability and skill. If we selected our leaders based on meritocracy, he was sure that women would find their place on boards and in executive suites. Problem solved.
 
The word diversity has been bantered around for decades in discussions about corporate leadership. We’re told that diversity is a business imperative, that it’s good for business. In 2009 the SEC required companies to disclose their approach to diversity, without ever defining it. Diversity could mean anything. It was for the company to define, and the term can take on an empty ring.
 
2020 Women on Boards was the first organization to put a stake in the ground and define diversity to mean a minimum of 20% women on public company boards. Other groups added their own definitions and there are now diversity initiatives that call for 25%, 30%, 40% and parity for women on boards, many of these initiatives coming from European countries where strict quotas are enforced by law.
 
Those who talk about meritocracy when it comes to board service are perpetuating the myth that boards are chosen based on a specific set of criteria. It is not like applying to college. Each board has a unique set of challenges that are best addressed by a diverse group that brings a vast range of skills and experiences to the table. Most board members are selected because other board members know them or know of them. There’s nothing meritocratic about it.
 
Speak out against all male boards. Vote your proxies and send a message to companies that gender diversity is a priority!

IPOs Getting on the Diversity Bandwagon?

Last week it was Box Inc. and this week Shake Shack. Both companies launched IPOs with women on their boards. Box, the newest in file sharing platforms, went public as a Winning 'W' Company, with two of its ten directors women. Shake Shack, the hip, roadside burger joint coming to all neighborhoods soon, went public with just one woman on its board. It’s a 2020 Token 'T' Company.
 
We're happy to see companies take our advice (Needed: IPO Checklist that Includes Women) by putting their board in order before they go public, and not scramble to do the right thing after their IPO. But, we want our burgers and eat them too. So don’t stop now, Shake Shack. Put another woman on your board and join the ranks of Winning 'W' Companies. Your stakeholders will thank you!

Eureka! Urban Outfitters becomes a W Company!

Urban Outfitters (NASDAQ:URBN) heeded the call of shareholder activists and named Elizabeth Ann Lambert to its board of directors on December 22. Lambert, principal and manager of Bunkhouse Group, LLC, became the second woman director on Urban’s board, after the appointment of Margaret Hayne, president of Free People, Urban's chief creative officer and wife of CEO Richard Hayne in 2013. Women now hold 25% of Urban Outfitters' board seats. Investors are hailing the news.
 
At the Urban Outfitters' annual meeting on May 27, Mr. Hayne thumbed his nose at a shareholder resolution that called on the company to add female and minority directors. The proposal was sponsored by Thomas DiNapoli, Comptroller for the State of New York on behalf of the New York State Common Retirement Fund and Denise Nappier, CT State Treasurer, on behalf of the Connecticut Retirement Plans and Trust Funds.
 
In 2013 Mr. Hayne urged shareholders to reject diversity proposals on the grounds that imposing gender and minority requirements would "undermine the company's holistic evaluation of candidates," reported Gretchen Morgenson in her article "Shareholders Are Speaking Up, But Who's Listening?
 
Well, it appears that Mr. Hayne was listening, and we hope that other T and Z companies (those with one or no women) will follow Urban Outfitters lead.

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