DiNapoli defends DEI benefits, fires off letter to 5 companies seeking disclosure

New York state Comptroller Thomas P. DiNapoli on March 7 offered a vigorous defense of using diversity, equity and inclusion criteria as investing guidelines in his role as the sole trustee of the New York State Common Retirement Fund, Albany.

"Investors looking at diversity, equity and inclusion are concerned with how their portfolio companies treat individuals and tackle some of their most complex challenges," said DiNapoli in a news release identifying five companies to which the $259.9 billion fund recently sent letters asking about their DEI practices.

"The Fund urges the development of robust DEI strategies because it's good business," he said. "Fostering an inclusive and diverse workforce can enhance innovation, creativity, and problem-solving capabilities, and ultimately lead to improved shareholder value."

In mid-February, DiNapoli wrote to U-Haul Holding Co., Jabil Inc., Worthington Enterprises Inc., MicroStrategy Inc. and Rollins Inc., asking them to disclose the gender, racial and ethnic composition of their directors to provide investors with information about their "commitment to including diverse viewpoints and perspectives in the board room," said the news release. These companies "currently lack the disclosure that has become a best practice among publicly traded companies."

The letters, signed by DiNapoli, are similar to but are not formal shareholder resolutions.

One example provided by the comptroller's office was the Feb. 15 letter to U-Haul: "It appears from a review of public documents that U-Haul does not disclose the gender, racial and ethnic composition of its directors, leaving investors without crucial information about the company's commitment to including diverse viewpoints and unique perspectives in the board room," the letter said. "This type of disclosure is now a leading market practice among publicly traded companies."

The letter asked U-Haul to respond to four specific questions, including annual disclosure of DEI efforts and making a commitment to DEI factors when considering nominations to the board of trustees.

"We look forward to discussing these important issues with you, but if U-Haul fails to respond to this letter or address the above issues, our Fund will consider further actions, which may, consistent with its Proxy Voting Guidelines, include withholding votes from incumbent board of director nominees at this year's annual meeting," the letter said.

The news release also said the New York pension fund had filed DEI reporting requests via shareholder resolutions with NVR Inc. in October and with Meritage Homes Corp. in November.

"The proposals ask for a public accounting of the companies' employee recruitment, retention, and promotion rates, and pay by gender, race, ethnicity, sexual orientation, age, disability, and veteran status," the news release said.

The pension fund withdrew the Meritage Homes resolution Jan. 11 "after an agreement with the company was reached," the news release said.