What Investors Expect Regarding Board Diversity
Each year, the largest U.S. investors describe their expectations regarding board diversity as part of their proxy voting guidelines. Below is a list of the most recent guidelines.
BlackRock (2024)
Boards should aspire to 30% diversity of membership and have at least two female directors and one director who identifies as a member of an underrepresented group
May vote against members of a nominating and governance committee if a company has not adequately explained their approach to diversity in their board composition based on BlackRock’s assessment of corporate disclosure
BlackRock will look at the level of progress toward board diversity when making voting decisions on companies with smaller market capitalizations.
State Street (2023)
Will vote against nominating and corporate governance committee chairs of Russell1000 companies if the board does not disclose racial and ethnic composition, does not have at least 30% women, or does not disclose gender composition
Will vote against the nominating and corporate governance committee chair of S&P 500companies that do not have at least one director from an underrepresented racial/ethnic community
Expects significant disclosure on diversity oversight, strategy, goals, and metrics
Vanguard (2024)
A fund will generally vote against the nominating and/or governance committee chair if a company’s board is not taking action to achieve board composition that is appropriately representative, relative to their markets and the needs of their long-term strategies.
At minimum, a board should represent diversity of personal characteristics,inclusive of at least diversity in gender, race and ethnicity on the board as well as diversity of tenure, skills and experience; will consider applicable market regulations and expectations and company specific context
Expect disclosure of diversity characteristics on a self-identified basis and may occur on an aggregated level.
Goldman Sachs (2023)
Will vote against or withhold from members of the nominating committee if: ‒ For U.S. incorporated companies, the board does not have at least 10% women directors and at least one other diverse director ‒ For S&P 500 companies, the board does not have at least one diverse director from an underrepresented ethnic group in addition to the gender expectations above ‒ For companies not incorporated in the US, the board does not have at least 10% women directors or does not meet the requirements of local listing rules or corporate governance codes or national targets
Will vote against or withhold from the full board at companies incorporated in the US that do not have at least one woman director.
NYS Comptroller (2023)
At board elections of Russell 1000 companies, the Fund, in accordance with its Proxy Voting Guidelines, will vote:
Against all incumbent board nominees at companies with no board directors identifying as an underrepresented minority (as defined by federal Equal Employment Opportunity Commission)
Against all incumbent nominating committee nominees when a board has just one director identifying as an underrepresented minority;
Against all incumbent nominating committee nominees at companies that do not disclose the self-identified individual racial/ethnic diversity of their board directors; and
Against all incumbent nominating committee nominees at companies that do not explicitly consider both gender and racial/ethnic diversity in their search for directors.
Legal & General Investment Management (2023)
Expects women to make up at least one-third of board directors and Named Executive Officers by 2023
Will vote against directors of S&P 500 with fewer than 25% women on the board
Expects smaller companies to have at least one woman at board level and to reach the33% target over time
Will apply voting sanctions to the S&P 500 companies without at least one ethnically diverse director on board
Neuberger Berman (2023)
Boards should be at least 30% gender diverse
May hold the chair of the nominating committee accountable if the board fails to disclose board composition and may take voting action if the board lacks racial or ethnic diversity
May hold companies to higher standards of board diversity where market or listing standards are more stringent
J.P. Morgan (2023)
Will generally vote against the nominating committee chair when the company does not disclose the gender or racial and ethnic composition of the board or the company lacks any gender diversity or any racial/ethnic diversity unless there are mitigating factors
Mitigating factors include recent retirement of relevant directors, a relatively new public company, and an ongoing search for a director
CalPERS (2023)
On a case-by-case basis, where engagements are not successful, will withhold votes from directors who are nominating/governance committee members, board chairs, or long tenured directors on boards that lack diversity and do not make firm commitments to improving the board diversity in the near term when engagements are not successful
Long term means greater than 12 years on the board
Alliance Bernstein (2023)
Will generally vote against the nominating/governance committee chair, or a relevant incumbent member in case of classified boards, when the board has no female members
Based on the outcome of engagements, will begin voting against the nominating/governance committee chair or a relevant incumbent member for classified boards of companies that lack minority ethnic/racial representation on their board without a valid explanation