SEC

Lessons from Across the Pond

England will not mandate gender diversity on corporate boards, according to a new report commissioned by the British government last week. Instead, the commission recommends that companies should aim for a minimum of 25% female representation by 2015.  It calls on CEOs to be more transparent about corporate leadership make-up, suggesting that companies disclose the proportion of women on boards, the number of women executives and total number of women employees on an annual basis.

We think the SEC should take note: Here at home the SEC has asked U.S. companies to be more transparent about gender diversity –  but it hasn't defined diversity. The SEC should put a stick in the ground and define board diversity as we do: 20% women by 2020.

It's proxy time.

With the 2011 season upon us we're noting lots of articles about increased shareholder activism. The recent SEC ruling allowing shareholders to vote on executive compensation (say on pay) may open doors for shareholders to weigh in on other kinds of proposals, like board diversity.

Online proxy voting services are making it easier for retail investors to vote their proxies. One service, Moxy Vote, allows investors to align their votes with advocacy groups they trust. Starting this month, 2020 Women on Boards joins the ranks of Moxy Vote Advisors, endorsing resolutions that encourage board diversity and slates that include women director candidates.

In the last week alone, we’ve endorsed the slates of 13 companies that have included women on the slate, including Capital Federal Financial, Warner Music Group, Novartis, and The Walt Disney Company (see the full list here).

Even if you don’t use the site to vote your proxies, Moxy Vote is a great way to monitor corporate resolutions and to follow initiatives you care about. Find an advocate that aligns with your interests and see what resolutions they support. It's like Facebook for shareholders. How cool is that?

Board Diversity: Does England’s Corporate Governance Code Push Harder than the SEC’s Governance Disclosure Rule?

England’s revised corporate governance code calls for boards that are “well balanced” with gender diversity to avoid “group think.” The revised code is an effort by the government to avoid future banking crises. Prime Minister David Cameron commissioned a report on what the government could do to increase the number of women directors. He said that more women on corporate boards would increase productivity. The report is due in February.
 
On this side of the pond, in 2009 the Securities and Exchange Commission adopted “The Governance Disclosure Rule.” The rule requires companies to consider diversity when nominating director candidates. The SEC doesn’t define diversity letting public companies to figure it out for themselves. The SEC notes that investor knowledge about diversity policies is useful, and says that a meaningful relationship between diverse boards and improved corporate financial performance exists.
 
We hope that in 2011 the S.E.C. will take a leadership role in defining diversity so there is no ambiguity about the issue. We wish you all a happy and healthy New Year and look forward to reporting on gains in the number of women directors in the months to come. If you haven’t done so already, please register your support for 2020 Women on Boards. Together we can make it happen!

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