Sealed Air – Board Diversity (2018)
Outcome: Withdrawn following Sealed Air's commitment to strengthen corporate governance document and enhance disclosures concerning its policy of inclusiveness whereby diversity of age, gender, international background, race, ethnicity and specialized experience are considered in each director search.
WHEREAS: Sealed Air has one woman on its ten member Board of Directors, and the racial and ethnic diversity of the Board is unclear. One woman serves on its twelve member leadership team.
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 better understanding of consumer preferences, a stronger mix of leadership skills, and improved risk management.
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. Numerous state and city pension funds such as California, Connecticut, Massachusetts, New York City, New York State, 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).
In 2013, the Board revised its governance documents to provide guidance to “seek to achieve a mix of Board members that enhances the diversity of background, skills and experience on the Board, including with respect to age, gender, international background, ethnicity and specialized experience.”
Yet, the company noticeably lags peers on board diversity. Eastman Chemical, Sonoco, Avery Dennison and Bemis each have two or more women on their Boards. Clorox has four women on its twelve person Board of Directors.
MSCI, in a review of key governance metrics, determined that Board entrenchment at Sealed Air is an area of concern (MSCI ESG Research, LLC).
Resolved: Shareholders request that the Board of Directors prepare a report by September 2018, at reasonable expense and omitting proprietary information, on steps Sealed Air is taking to expand diversity on the Board, including but not limited to:
1. Committing to include women and underrepresented minority candidates in every pool from which Board nominees are chosen;
2. Expanding director searches to include nominees from corporate positions beyond the executive suite and from environments including government, academia, and nonprofit organizations; and
3. Reporting on progress achieved and challenges experienced.