Among the many noteworthy "expectations" encompassed in LGIM's "2019 North America Corporate Governance & Responsible Investment Policy" are those concerning board and senior management diversity. LGIM will raise the bar on board gender diversity for the largest 100 companies in the S&P 500 and the S&P/TSX from one female director (which is its current expectation for all companies) to at least 25% of the board beginning in 2020, and will expand that policy to include all S&P 500 and S&P/TSX companies beginning in 2021. LGIM further expects a minimum of 30% female board members and senior management for all companies by 2023 - supported by targeted actions to attain these minimum thresholds.
The guidelines elaborate:
To provide investors with a comprehensive understanding of their diversity strategy, we expect companies to be transparent regarding the procedures used to find new members for the board and at senior management level, and how that process ensures a diverse board and senior executive pipeline. We expect all companies to disclose a breakdown of board directors, executive directors, managers and employees by geography, main skill set, and gender.
In terms of overboarding thresholds, LGIM expects large public company active CEOs to be limited to one other (unrelated company) non-executive directorship, and other directors (non-executives) to serve on no more than four public company boards, provided that - for purposes of those limitations - LGIM counts an independent board chair position as two directorships due to the commitment involved.
See also LGIM's annual Active Ownership report (full report and summary), this release, this Investment Week article, this prior report: "LGIM Moves on Board Diversity, Pay Equity, Climate Initiatives," and additional information & resources on our Institutional Investors page. This post first appeared in last week's Society Alert!