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Governance

Investors put skill ahead of gender or ethnic diversity in choosing directors, survey finds

Nearly three-quarters of global institutional investors named directors' skills as the most important criterion, ahead of gender or ethnic diversity, in terms of the makeup of a company's board, according to an investor survey conducted by Morrow Sodali.

Some 71% of respondents voted in favor of this view, showed the results of the 2018 edition of the firm's annual institutional investor survey. Morrow Sodali is a global consulting firm that specializes in shareholder services, corporate governance, proxy solicitation and capital markets transactions.

The survey results also showed that 93% of respondents integrated environmental, social and governance considerations into investment decision-making or are in the process of such integration.

Some 54% of respondents said engagement with shareholders on succession planning was another important issue in terms of choosing directors. Some 61% of all respondents support credible, long-term activist campaigns.

Nearly two-thirds of respondents said collective engagement and collaboration with other shareholders related to annual general meetings is a powerful tool to help influence change.

Some 71% of surveyed investors seek enhanced disclosure about a measurable, sustainable long-term business strategy from the companies in which they invest. Some 61% of respondents said the CEO pay ratio disclosure will be a useful metric to them. In addition, poor allocation of capital by companies was a key concern for 54% of respondents.

The survey of a total of 49 asset owners and money managers representing $31 trillion in total assets was conducted in November and December. Comparative data for 2017 were not available.

A Morrow Sodali spokesman was not available to comment on the survey.