Board Diversity Policy – Hartford Financial Services (2013)
Outcome: Successfully withdrawn following a commitment from the company to amend their governance documents to include a clear definition of diversity, inclusive of gender and race, and make diversity an intentional part of board nominee search criteria.
BE IT RESOLVED:
That the Board of Directors consistent with their fiduciary duties:
1.) Take every reasonable step to ensure that women are in the pool from which Board nominees are chosen;
2.) Publicly commit itself to a policy of Board inclusiveness to ensure that women are routinely sought as part of every Board search the company undertakes;
3.) Publish a report by November 2013, at reasonable expense and omitting proprietary information, on its efforts to encourage diversified representation, inclusive of gender, on its Board, and the manner in which the nominating committee or board of directors will assess the effectiveness of its efforts and policy.
Several studies have underscored the nexus between greater board and management diversity and improved corporate governance and corporate financial health. This has been particularly noticeable when there is a critical mass of three or more women on a board.
According to recent studies from researchers at Hebrew University, Wellesley Centers for Women, University of Western Ontario and V. Kramer Associates, having a critical mass of at least three women directors is good for corporate governance.
However, according to Governance Metrics International (GMI) Ratings women on average represent 12.6% of S&P 1500 Boards; and 11.6% of Russell 3000 directors are women. A 2012 report by the business-led Committee for Economic Development (CED) entitled Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive notes that that the percentage of women on all U.S. corporate boards has been stuck below 13% for a decade.
The National Association of Corporate Directors released a report in September 2012 warning that progress toward board diversity is stalling.
While our company mentions that its nominating and corporate governance committee considers diversity inclusive of gender diversity in its nomination criteria, an increase in gender balance had not been realized by the Board. Further, the company does not disclose the manner in which the Board will assess the effectiveness of its nominating practices thereby creating uncertainty in the governance process.
Hartford Financial has just one woman on its board of directors. Industry peers Prudential Financial and The Allstate Corporation each have three women on their boards of directors. Chubb and Progressive each have two women on their boards of directors.
In our view, companies combining competitive financial performance with high standards of corporate governance, including a gender balanced board, are better positioned to generate long-term value for their shareholders.
For all the reasons above, we urge our fellow shareholders to vote in favor of this proposal.