DiNapoli strives for greater diversity in the pension fund’s portfolio companies
New York State Compt. Increase Equity and Inclusion (DEI).
“We encourage the Fund’s portfolio companies to ensure diversity, equity and inclusion across their businesses, not just because it’s the right thing to do, but because they’re better positioned to thrive over the long term.” DiNapoli called. “As a major investor focused on safeguarding the long-term value of our pension fund, we challenge portfolio companies to adopt best practices that benefit their bottom line. More and more companies are making real progress, but more needs to be done.”
“Harassment and discrimination, too often swept under the rug, can have a corrosive effect on the work environment and threaten a company’s reputation and success,” he said New York Comptroller Brad Lander, who co-filed two of the shareholder motions on behalf of NYC Retirement Systems. “As shareholders, we believe that cultivating a culture of secrecy about negative workplace experiences does not serve companies or their employees. What cannot be discussed cannot be addressed. We are proud to join Comptroller DiNapoli and the New York State Common Retirement Fund in urging these companies to publicly report the results of their efforts to prevent harassment and discrimination and to hold these employers accountable for their efforts.”
Businesses – and their shareholders – benefit from DEI and policies that ensure employees are hired from the largest pool of talent. To encourage companies to improve their practices and, in turn, their long-term value, DiNapoli and the fund have submitted a series of shareholder proposals, urging portfolio companies to increase their transparency and address the risks that come with not adhering to inclusivity diversity .
Examination of Racial Justice
At chipotle, DiNapoli resubmitted a shareholder proposal seeking an independent review of the company’s civil rights, racial equality, diversity and inclusion practices and their impact on the company’s business. Last year, the proposal received 36% support from Chipotle shareholders. Last week, Chipotle announced the start of an independent third-party review, joining Amazon, Dollar General, Dollar Tree and Match Group, which accepted the pension fund’s proposal last year. Due to the company’s actions, the proposal was withdrawn.
Workforce DEI reporting
DiNapoli’s shareholder motions were filed at Universal Health Services, Inc. And Brinker International, Inc. Require companies to disclose their progress in improving DEI in their workplaces. The proposals call for public accounting of employee recruitment, retention and promotion rates, and payment by gender, race, ethnicity, sexual orientation, age, disability and veteran status.
Differences in health care outcomes
DiNapoli advanced two new initiatives focused on equity in healthcare. Proposals submitted to Humana Inc. And Elevance Health Inc. seek an analysis of racial and ethnic disparities in health care outcomes. DiNapoli and the Fund request that these reports include the extent of racial and ethnic disparities found, information about any barriers to collecting this data, and efforts by companies to close the disparities and improve health care outcomes. Since filing, the Comptroller has entered into an agreement with Humana, which has agreed to publish a report on the identification and treatment of racial and ethnic health disparities. The proposal was subsequently withdrawn by Humana.
Separate Applications Submitted to Two Fortune 500 Healthcare Companies — Centene Corporation And Molina Healthcare, Inc. — Require companies to include the reduction of maternal morbidity (death or unexpected serious consequences after childbirth or childbirth) in their performance assessments that determine executive compensation. Black women are three times more likely to die from pregnancy-related causes than white women, according to the US Centers for Disease Control and Prevention.
Disclosure of Discrimination and Harassment
Businesses must be proactive in addressing the corrosive effect that discrimination and sexual harassment have on workplace rights, morale and business performance. DiNapoli has submitted proposals to Activision Blizzard, Inc., Pinterest, Inc., And Wells Fargo company — Businesses affected by allegations of discrimination or harassment. The proposals require companies to publicly report on their efforts to prevent harassment and discrimination, including the number of pending complaints, the number and dollar amounts of recent settlements, and the number of enforceable contracts that contain concealment clauses that limit discussion of harassment or limit discrimination. The Pinterest and Wells Fargo proposals were jointly submitted by Lander and three of the NYC Retirement Systems.
In addition to these shareholder proposals, DiNapoli writes to companies in the fund’s portfolio asking for information about DEI policies and practices from its board and employees. The letter expands on its August 2020 call for companies to adopt improved policies. The letters will be sent to 75 of the largest Russell 1000 index companies that lack sufficient board diversity under the fund’s proxy voting policies. Companies receiving the letter include JPMorgan Chase & Co., Costco Wholesale Corporation, Netflix, Inc., Citigroup Inc., Moderna, Inc., Dell Technologies, Inc.And Caesar’s Entertainment, Inc.
The Fund believes in the importance of board diversity as a key measure of sound corporate governance and a key attribute of a well-functioning board. For Russell 1000 company board elections, the Fund will vote in accordance with its proxy voting policy as follows:
- Against all incumbent director nominees in corporations with no directors who identify as an underrepresented minority (as defined by the Federal Equal Employment Opportunity Commission, which includes one or more of the following: Black or African American, Hispanic or Latino, Asian, American Indian or Alaskan Native, Native Hawaiian or Pacific Islander);
- Against all incumbent nominating committee candidates when a board has only one director who identifies as an underrepresented minority;
- Against all incumbent corporate nominating committee candidates who do not disclose the self-identified individual racial/ethnic diversity of their board members; And
- Against all incumbent nominating committee candidates in companies who do not explicitly consider both gender and racial/ethnic diversity in their search for directors.
The Fund believes that disclosure of EEO-1 data helps investors assess their portfolio companies’ commitment to increased inclusion not just in a specific year but over time and will challenge any incumbent members of the Remuneration Committee of Companies in the Russell 1000 Index that do not disclose EEO vote -1 data to investors.
Since 2018, the fund has voted against incumbent board members seeking re-election at companies that do not have women on their boards. If a company has only one woman on its board of directors, the Fund votes against all incumbent members of the board’s nominating committee.
About the New York State Common Retirement Fund
The New York State Common Retirement Fund is one of the largest public pension funds in the United States. The fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. It has consistently been ranked as one of the best managed and best funded plans in the country.