The man in charge of New York City’s $200 billion public pension fund wants more than 50 companies to take a page from the National Football League and pledge that they will consider female and minority candidates for their highest-level jobs.
Scott Stringer, the New York City comptroller, on Friday is expected to announce that he has sent a letter to 56 companies – including AT&T, Boeing, Delta Air Lines, Marriott, Walmart and the Walt Disney Co. – asking them to adopt policies to consider women and people of color for every open board seat, as well as for CEO appointments.
The move is in line with the “Rooney Rule,” an NFL policy adopted in 2003 that requires every team to interview at least one person of color for head coaching vacancies; it now includes other high-ranking front-office positions. The rule is named after Dan Rooney, the late former Pittsburgh Steelers owner who also chaired the league’s diversity committee.
“As a pension system, we want to invest in 21st century companies that represent the future – not companies with management teams that look like they’re out of the 1950s,” Stringer said in a statement. “It’s time for the business world to embrace these reforms that will lead to decades of progress.”
Stringer’s office said the companies have yet to adopt Rooney-type search policies for boards or CEO positions, based on his review.
Other companies – such as Facebook, Amazon and Costco Warehouse – have adopted such policies at the board level, at times in response to investor pressure.
Stringer’s office said about two dozen of the 56 companies appear to have no minorities on their board.
The new campaign is the third phase of an effort to improve the accountability and diversity of corporate boards, a statement from Stringer’s office said. In 2014, his office launched a campaign to give investors more power to nominate directors, a process known as “proxy access.” More than 600 companies have since adopted proxy access.
Stringer has also pushed to get boards to disclose in a matrix format more details about directors’ experience and demographic background.
The office is likely to issue shareholder proposals for next year’s proxy season for companies that do not adopt the policy, according to Stringer’s office. Investors vote on such proposals during annual meeting season and companies can decide whether to implement them – but the vote often generates additional, and sometimes unwanted, attention for the company.
It’s quite possible many companies will argue they already interview minority or female candidates for these jobs and that an official policy is not needed. How investors would hold companies accountable for sticking to the rule is also questionable. Given the incredibly private nature of board and CEO searches, it’s unclear what consequences companies would face if they adopted such a policy but didn’t follow through, or how shareholders would even know if they didn’t.
“This is about changing market practice and ensuring that diversity is front-and-center in leadership searches around the country,” Stringer said in an emailed statement. “If we don’t see real change in companies with persistent lack of diversity, then we’ll vote against the board nominating committees.”
Among Russell 3000 companies – an index that represents most publicly traded companies on major U.S. stock exchanges – just 20 percent of board seats are held by women, according to the research firm Equilar. The percentage is higher among the largest U.S. firms, with 27 percent of S&P 500 company board seats held by women as of July. A study by Deloitte and the Alliance for Board Diversity said total minority representation among Fortune 500 board seats was 16.1 percent in 2018.
Meanwhile, women make up just 5 percent of the chief executive jobs among the S&P 500. Only four current Fortune 500 CEOs – fewer than 1 percent – are black, and none of those four are women, according to a report released Thursday by the executive search firm Korn Ferry.