Yesterday, New York City Comptroller Scott M. Stringer and the New York City Retirement System (NYCRS) announced the results of their initiative calling on companies to adopt a board and CEO search policy requiring consideration of women and people of color as candidates. This campaign is part of the Comptroller’s “Boardroom Accountability Project 3.0” initiative, which the Comptroller’s office launched in October 2019 by sending letters to 56 companies requesting that they adopt board/CEO diversity search policies.
In the 2020 proxy season, the Comptroller, on behalf of NYCRS, submitted shareholder proposals with 17 of the 56 companies, for each company to adopt a search policy for directors and external CEOs that mandates the consideration of both women and persons of color. Yesterday’s announcement disclosed that NYCRS has reached negotiated settlements with 13 (or 76.5%) of those companies to adopt and disclose a board and CEO diversity search policy. NYCRS has declined to withdraw its proposal at the remaining four companies, even though two did adopt diversity search policies that apply to directors (but not to CEOs). The SEC granted one of these two companies no-action relief to omit NYCRS’s proposal on the basis of Rule 14b-8(i)(10) (substantial implementation) and Rule 14b-8(i)(7) (ordinary business). However, shareholders will be voting on NYCRS’s proposal at the other company that adopted a board-only diversity search policy, as well as two additional companies that have not adopted board/CEO diversity search policies.