SBA Communications – Board Diversity (2020)
Outcome: Successfully withdrawn following the company’s agreement to expand disclosures in its 2020 proxy statement relating to its commitment to diversity inclusive of gender, race and ethnicity and its announced success in December 2019 in expanding gender diversity in its Director ranks. Also, the Company agreed to publish, and endeavor to do so annually, a Director skills/diversity matrix noting key qualification, skills and attributes most relevant to the decision to nominate candidates.
WHEREAS: SBA Communications 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 recognize the strong business case for board diversity. The Guiding Principles of Corporate Governance of the Business Roundtable, an influential association of executives, state: “Boards should develop a framework for identifying appropriately diverse candidates, which asks the nominating/corporate governance committee to consider women and/or minority candidates for each open board seat.” Benefits associated with board and management diversity include 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. The Wall Street Journal reports that firms are seeking diverse representation in the boardroom in the wake of sexual harassment claims.
Institutional investors have updated their proxy voting guidelines to reflect their belief that diversity on boards as well as in senior management, is an indicator of good corporate governance. BlackRock, the world’s largest asset manager, published proxy voting guidelines in 2018 that stated, “we would normally expect to see at least two women directors on every board.” State and city pension plans across the country have adopted proxy voting policies with minimum thresholds for board diversity.
Legislation mandating board diversity has arrived in the US. California legislation enacted in 2018 mandates gender diversity on the boards of companies with principal executive offices in that state and other states and municipalities are following suit.
Despite recent progress among the largest companies, women and people of color remain underrepresented on U.S. corporate boards. 20 percent of companies in the Russell 3000 have all male boards. Excluding S&P 500 companies, women account for just 19 percent of the directorships in the Russell 3000. Among board members of Russell 3000 companies, where race was identified, non-white directors represent less than 11 percent.
Several peers have at least three women directors, including HCP, Scentre Group, Stockland and RLJ Lodging Trust.
Nearly one-half of the companies in the Fortune 100 explicitly disclosed their board members’ race or ethnicity in the 2019 proxy season.
Resolved: Shareholders request that the Board of Directors prepare a report by September 2020, at reasonable expense and omitting proprietary information, on steps SBA Communications is taking to enhance board diversity beyond current levels, such as:
1. Committing publicly to include women and people of color in each candidate pool for board and senior leadership seats;
2. Disclosing the racial, ethnic and gender composition of the board in annual proxy statements;
3. An annual assessment of challenges experienced and progress achieved.
We believe this report will foster Board accountability on this issue.