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Governance

Segal Marco Advisors draws line on issue of gender diversity

Segal Marco Advisors will begin voting against the nominating committees of U.S. corporate boards that do not have female directors, effective March 1.

"Research continues to strongly support the business case for gender equality in the workplace," said Maureen O'Brien, vice president and director of corporate governance at Segal Marco in a news release Wednesday. "A study last year of 222 companies by LeanIn.org and McKinsey showed company commitment to gender diversity was at an all-time high for the third year in a row. Last year also brought aggressive tactics from shareholders to instigate change and, in hindsight, 2017 may look like the turning point for more inclusive boards of directors."

Segal Marco Advisors provides corporate governance support and proxy-voting services in addition to investment consulting.

The firm's announcement comes about a year after money manager State Street Global Advisors sent letters to 600 U.S., U.K. and Australian companies in which it invests on behalf of its clients, informing them for the first time that it would vote against the chairmen of their nominating committees if there were no female board directors or candidates. Of the 600 companies that received letters, SSGA ultimately voted against chairs at 400 companies who had not taken any steps to improve gender diversity on their boards. BlackRock (BLK) also voted against directors on corporate boards that lacked gender diversity last year, and proxy-voting advisory firm Glass, Lewis & Co. announced it will be issuing recommendations against nominating chairmen on all-male boards starting in 2019.

Ms. O'Brien added in a telephone interview that while the firm previously had considered gender diversity in its voting criteria, March 1 will mark the first time it will use the data it has been collecting on the gender breakdown of boards to cast negative votes at companies that do not have any female directors.

Outside of gender diversity, Segal Marco Advisors also announced Wednesday that it will consider the CEO-to-median worker pay ratio in its executive compensation votes. The Securities and Exchange Commission's new pay-ratio disclosure rule is in effect for this year's proxy season.

"Investors won't have much comparable data in the first year of reporting on the CEO-to-average-worker pay ratio, but we'll consider the data point in situations where the vote is a close call," Ms. O'Brien said in the release.

Ms. O'Brien added in the telephone interview that firm executives expect pay ratios to vary by industry and workforce differences like geography, and will focus on how companies that are alike in size, industry and client base compare.