Hurray for Massachusetts' State Treasurer, Steven Grossman, who put some muscle in the campaign to increase the number of women on corporate boards. He announced this week that his office will unveil new proxy guidelines on how Massachusetts invests its pension funds. The new guidelines consider governance, executive compensation, environmentally friendly policies, and the presence of women in the boardroom and executive suites. If the Pension Reserves Investment Management committee supports the changes, it will go to the full PRIM board for a vote on April 5.
Grossman follows the lead of Connecticut State Treasurer, Denise Nappier, a nationally recognized leader who has urged corporations to adopt policies that ensure that women and minority candidates are routinely sought as part of every board search.
Grossman said, "Massachusetts will hopefully play a more active role in using those principles in our practices, to make it clear to corporate America that its not acceptable to have such a low representation of women in the board room and in the executive suite."
Institutional investors hold a lot of influence when it comes to corporate decision-making. When institutional investors take on a cause, companies listen. Why? Because, according to Johan Sulgeman, professor of finance at SMU Cox, "when firms go against institutional investor preferences, stock prices take a hit."
We hope that Grossman and Nappier will lead the charge so that other state pension funds will adopt similar proxy guidelines, and that board diversity and the 20/20 model become a national call to action.