Vote Against Companies Not Committed to Board Diversity

Segal Marco Advisors Will Vote Against Companies Not Committed to Board Diversity

Proxy voting efforts are also expected to focus on executive compensation and the opioid supply chain.

NEW YORK AND CHICAGO: Beginning next month, Segal Marco Advisors will vote against the nominating committees of boards of directors at U.S. firms if the boards have no female directors.

Segal Marco, which provides investment advice and support to about 600 pension fund and related clients with $500 billion assets under advisement, announced the change to its proxy voting policy today in the 2018 Corporate Governance Report.

“Research continues to strongly support the business case for gender equality in the workplace,” said Maureen O’Brien, vice president and Director of Corporate Governance at Segal Marco. “A study last year of 222 companies by and McKinsey showed company commitment to gender diversity was at an all-time high for the third year in a row. Last year also brought aggressive tactics from shareholders to instigate change, and in hindsight 2017 may look like the turning point for more inclusive boards of directors.”

The report also announced changes to how Segal Marco will weigh votes on executive compensation. The voting policy was amended to include new data made available under new corporate reporting requirements regarding executive compensation advisory votes. Companies issuing proxy statements in 2018 will report the ratio of pay to the CEO as compared to the average worker in the company. The disclosure regulation took seven and a half years to be enacted after the passage of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

“Investors won’t have much comparable data in the first year of reporting on the CEO to average worker pay ratio, but we’ll consider the data point in situations where the vote is a close call,” said Ms. O’Brien.

Looking Back

The Segal Marco report reviewed the 2017 market environment for corporate governance and disclosed the firm’s vote trends. Segal Marco voted on their client’s behalf on 1,865 shareholder proposals in 2017. The shareholder proposals voted on included 63 on disclosing political and lobbying contributions, 59 on climate change and 43 for an independent board chair (see table below). Segal Marco’s 2017 statistical voting record is available in the report.



Looking Ahead

Ms. O’Brien pointed to investor engagement with companies in the opioid supply chain that will inform several proxy votes at drug manufacturers and distributors in 2018.

An investor coalition—Investors for Opioid Accountability (IOA)—is a group of investors with $1.3 trillion in assets who are focusing specifically on how drug manufacturers and distributors are handling the crisis. Segal Marco is a founding member of the IOA. The state treasurers of California, Illinois, Pennsylvania, Rhode Island and West Virginia are also engaging drug distributors in a coordinated effort.

“In addition, investors likely will see significant changes to executive compensation plans in 2018 because of the Tax Cuts and Jobs Act of 2017,” she said.

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Segal Marco Advisors, a member of The Segal Group, provides trusted advice that improves lives. Segal Marco delivers innovative, client-driven investment consulting advice, outsourcing solutions, proxy voting and corporate governance services. Clients include joint boards of trustees administering benefit plans under the Taft-Hartley Act, state and local governments, corporations, non-profit organizations, endowments and foundations. The firm works with financial services firms through Rogerscasey, a Division of Segal Advisors, and with Canadian clients through Segal Rogerscasey Canada.