Alphabet’s Board Strengthens Governance Practices – Adopts “Rooney Rule” Language after Trillium engages Management on Board Diversity
August 16, 2018 // Boston, MA
In May, when the company called to tell us that Sundar Pichai (Google’s CEO and an India native) would be joining the executive committee of Alphabet’s Board, we withdrew our shareholder proposal* which asked the company to address the lack of diversity on the Executive Committee of the Board – the company’s highest level of governance.
While pleased with this step to expand diversity, we followed up with the company to discuss why gender diversity on the board was moving in the opposite direction. The February resignation of Shirley Tilghman left Alphabet with just two women on its eleven member Board.
Not seeing clear guidance in Alphabet’s governance documents on how the Board assesses diversity across all dimensions, we urged the company to adopt a diverse search policy – akin to the “Rooney Rule” – assuring that each director search Alphabet undertakes include at least one woman or underrepresented person of color in the candidate list.
Change first came when Board Chair, John Hennessy, announced to shareholders at the June annual meeting that for every new Alphabet board opening, a set of candidates that includes both underrepresented people of color and different genders will be considered.
Further confirmation of acceptance of our request to commit to a diverse search came in July when the Board published changes to its Corporate Governance Guidelines. Specific to Board membership the company now states:
when evaluating candidates for nomination as new directors, the Nominating and Corporate Governance Committee will consider (and will ask any search firm that it engages to provide) a set of candidates that includes both underrepresented people of color and different genders.
Trillium believes that diverse boards lead to improved financial and social outcomes and the search process corporate boards use play an important role in improving board diversity. We applaud Alphabet for taking these important steps to improve its governance practices.
*as did the co-filers of the proposal Northwest Women Religious Investment Trust, and Benedictine Sisters of Virginia.
Contact: Lisa MacKinnon, Investment Manager, email@example.com
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