Glass Lewis’s Assessments on Firms’ Diversity Disclosures

In a recent blog post, proxy advisory firm Glass Lewis discussed findings from its review of S&P 500 companies’ proxy disclosures in 2021. Glass Lewis reported a “noticeable improvement” in S&P 500 disclosures on corporate director diversity and skills. “While over 30% of companies received a “Poor” rating in 2020, less than 10% received one this year,” Glass Lewis reported. Glass Lewis’s 2021 Proxy Paper included an assessment of company proxy statement disclosures relating to board diversity, skills, and the director nominating process. Some of the findings:

• Approximately 74% of the S&P 500 disclosed board racial/ethnic diversity on an individual or aggregate level. “None” was the dominant category in 2020, as companies did not provide this data.
• Approximately 12% more companies provided a definition/explanation of how diversity is considered for the director search process in 2021 compared to last year, allowing shareholders to understand the factors the board considers when selecting director candidates.

• Few companies disclosed in their proxy statements, nominating committee charter, or corporate governance guidelines that they utilize a formal Rooney Rule in the director search process, or expressly stated a requirement to include diverse candidates in the director search pool. However, Glass Lewis observed that although many companies did not require that minority candidates be included in the initial pool of candidates, they did commit to including minority candidates in such pools.
• Glass Lewis reported a steady increase in the number of companies disclosing tabular skills matrices which identifies director skills at an individual level over the past few years, with over half of the S&P 500 disclosing skills in this way in 2021.