Ansys, Inc. – Board Diversity (2018)
Outcome: Withdrawn as company committed to disclosing steps being taken to increase diversity in its 2018 proxy statement, and to strengthening corporate governance documents to address the Nominating Committee's responsibilities to increase diversity, inclusive of gender, race and ethnicity in its review process.
WHEREAS: Ansys has only one woman on its Board of Directors.
We believe that diversity, inclusive of gender and race, is a critical attribute of a well-functioning board and a measure of sound corporate governance.
Corporate leaders increasingly recognize the strong business case for board diversity. The association of chief executives of U.S. companies, the Business Roundtable (BRT), updated its Principles of Corporate Governance in 2016, stating: “Boards should develop a framework for identifying appropriately diverse candidates that allows the nominating/corporate Governance committee to consider women, minorities and others with diverse backgrounds as candidates for each open board seat.” Ball Corporation CEO John Hayes, then Chair of BRT’s Corporate Governance Committee, articulated the rationale: “‘Similar to our efforts to promote diversity among our management ranks, diverse backgrounds and experiences on corporate boards, including those of directors who represent the broad diversity of American society, strengthen the performance of a board of directors and promote the creation of long-term shareholder value.” Research identifies business benefits associated with board diversity including a larger candidate pool from which to pick top talent, better understanding of consumer preferences, a stronger mix of leadership skills, and improved risk management. Research also suggests a critical mass of at least three women directors strengthens corporate governance.
Investor engagement by institutional investors to promote greater board diversity is increasing. State Street Global Advisors voted against director nominees on the proxy statements of 400 companies in 2017 due to inadequate board diversity. Board diversity is an engagement priority for BlackRock, the largest asset manager, as well as Vanguard, the largest mutual fund company. Massachusetts’ state pension fund did not support management in 69 percent of director elections this year because companies did not meet a diversity threshold of 30 percent women and people of color. Numerous state and city pension funds such as California, Connecticut, New York, and Rhode Island also actively encourage greater board diversity.
Comprising approximately 18 percent and 10 percent of all S&P 1500 directorships, respectively, women and people of color remain significantly underrepresented on U.S. corporate boards (2017 ISS Board Practices Study).
Ansys states it “sets high standards for the Company’s employees, officers, and directors. Implicit in this philosophy is the importance of sound corporate governance.” Still, the company lags peers on board diversity. Cadence Design and Autodesk have two and three women on their Boards, respectively. French software company Dassault Systems has five women on its eleven member board.
Resolved: Shareholders request that the Board of Directors prepare a report by September 2018, at reasonable expense and omitting proprietary information, on steps Ansys is taking to foster greater diversity on the Board, including but not limited to:
1. Strengthening Nominating and Corporate Governance policies by embedding a commitment to diversity inclusive of gender, race, ethnicity;
2. Committing to include women and underrepresented minority candidates in every pool from which Board nominees are chosen;
3. Reporting on progress achieved and challenges experienced.