Issue link: https://digital.shearman.com/i/1019978
BOARD DIVERSITY AND THE SKILLS MATRIX Lona Nallengara and Stephen T. Giove Shearman & Sterling LLP Board Diversity and The Skills Matrix | 21 BOARD DIVERSITY AND THE SKILLS MATRIX Lona Nallengara and Stephen T. Giove In September 2017, the New York City Comptroller (NYCC) launched the Boardroom Accountability Project 2.0 – an initiative that was designed to put pressure on large public companies to "refresh" their boards to make them "more diverse, independent and climate-competent." The initial phase of the Boardroom Accountability Project, launched in 2014, focused on bringing proxy access to the mainstream, and, coupled with significant support from other institutional investors, fueled the dramatic increase in the adoption of proxy access by-laws over the last three years. The second phase, which focused on those companies that had adopted (or will soon adopt) proxy access, was designed to use the threat of proxy access to force companies to engage in a discussion on board diversity. A large percentage of the companies engaged with the NYCC on board refreshment and many committed to make changes to their disclosures. And there was little likelihood that they would not. The NYCC's request for a director skills matrix as a tool to promote diversity had broad support among other large public pension funds – eight of them signed a petition asking the SEC for a rule requiring one. Additionally, the prospect of a shareholder proposal or, even worse, a "vote against" campaign directed against nominating and governance committee directors was not something many wanted to take on. The NYCC actually did submit shareholder proposals in 2018 to six targeted companies requesting they include a directors' skills matrix in their proxy – the NYCC withdrew five of those proposals when the companies agreed to disclosure changes. In June 2018, the NYCC announced the results of this second phase and claimed victory. According to the NYCC, 85 of the 151 companies "adopted improved processes and increased Provide the NYCC with enhanced disclosure in the proxy outlining each director's race/ethnicity, gender and sexual orientation, along with each director's skills and experience in a matrix format Engage in a discussion directly with the NYCC on board refreshment, including reviewing the company's director matrix Facilitate the NYCC's involvement in the board's process to identify potential director candidates A LARGE PERCENTAGE OF THE COMPANIES ENGAGED WITH THE NYCC ON BOARD REFRESHMENT AND MANY COMMITTED TO MAKE CHANGES TO THEIR DISCLOSURES. In connection with the second phase, the NYCC sent letters to the chairs of the nominating and governance committees of 151 U.S. public companies asking them to: BOARDROOM ACCOUNTABILITY PROJECT 2.0 INSIGHTS