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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015


DiNapoli: Corporate America Must Show Progress on Diversity, Equity & Inclusion

NYS Comptroller Calls on Companies to Advance Racial Equity
Strengthens Pension Fund’s Policy to Vote Against Boards That Lack Diversity

February 16, 2022

New York State Comptroller Thomas P. DiNapoli today announced the New York State Common Retirement Fund’s (Fund) efforts to increase corporate accountability for progress on diversity, equity and inclusion (DEI) issues. DiNapoli’s approach seeks action from corporations to ensure racial equity while holding them accountable for failing to ensure DEI throughout all levels of their companies.

“Corporate America must foster and protect racial and gender equity in the workplace, in company policies and in how it interacts with customers,” DiNapoli said. “When companies fall short and fail to address inequities, they put themselves and their shareholder value at risk. We’re seeing more and more companies do the right thing and make real progress on diversity, equity and inclusion, but there’s so much more work to do. The Fund will continue to expand its efforts to hold its portfolio companies accountable.”

Under DiNapoli’s leadership, the Fund engages with portfolio companies on a range of issues to address investment risks and opportunities. In order to identify and prioritize companies to engage with, the Fund researches and reviews corporate policies or practices that may run contrary to best practices or pose potential risks to the Fund, and monitors media and academic reports about controversies involving portfolio companies. Encouraging companies to have robust policies, practices, and data disclosure related to DEI is a priority for the Fund’s corporate governance engagement. Numerous studies have pointed to the material benefits of a diverse workforce, including a 2020 McKinsey study that shows diverse companies are more likely to outperform their less diverse peers.

Shareholder Proposals in 2022

The Fund employs shareholder proposals to raise issues directly to fellow shareholders and boards of directors. The Fund’s shareholder proposals seek new reporting and policies that would enhance transparency, mitigate investment risks, and improve shareholder value. When filing a shareholder proposal, the Fund seeks a productive dialogue with the company. If the company agrees to implement the proposal’s request, it is withdrawn by the Fund.

Diversity, Equity and Inclusion (DEI) Reporting

DiNapoli announced that the Fund filed shareholder proposals at Electronic Arts Inc., Monster Beverage, Inc., Take-Two Interactive Software, Inc., and HCA Healthcare Inc. seeking disclosure of their progress on improving workplace DEI. The disclosures sought in these proposals include the recruitment, retention, and promotion rates, as well as pay data of employees by gender, race, ethnicity, sexual orientation, age, disability and veteran status.

Currently, these companies have released very limited or no information on their DEI programs and practices. DEI reporting would allow investors to compare and assess the effectiveness of companies’ efforts.

The Fund has since reached an agreement with HCA Healthcare Inc., one of the nation's largest healthcare providers, and the proposal has been withdrawn.

Board Diversity Commitments

Since 2010, DiNapoli and the Fund have filed 39 shareholder proposals asking companies to take concrete steps to increase board diversity. As a result, the Fund has secured 21 agreements to promote diversity, which helped add 29 diverse members to boards of directors.

This year, DiNapoli reached an agreement with First Community Bankshares to consider diversity inclusive of sex, race, ethnicity, age, gender identity, gender expression and sexual orientation in nominating new board members, and include women and people of color in the candidate pool from which it chooses new directors. As a result of the agreement, the Fund withdrew its proposal, which had been filed for the second consecutive year after winning support from 71% of fellow shareholders at the company’s annual meeting in June 2021.

Another proposal calling for increased board diversity was co-filed, along with the State of Connecticut’s Retirement Plans and Trust Funds at Vicor Corp.

EEO-1 Reporting

The federal government collects information from companies detailing the race, ethnicity and gender of companies’ workforce, including their senior management. DiNapoli has asked the Kroger Company supermarket chain and Zoom Video Communications, Inc. to publicly disclose this data to increase transparency on DEI and provide comparable, reliable data versus peers and the market. Showing how the number of diverse employees and senior executives changes over time can provide insight into a company’s progress on DEI.

Discrimination and Sexual Harassment Disclosure

Corporate America must proactively address the corrosive effect that discrimination and sexual harassment have on workplace rights, morale, and company performance. DiNapoli recently announced proposals filed with Activision Blizzard, Inc., Tesla, Inc. and Starbucks Corporation — companies that have been impacted by allegations of discrimination or harassment.

Racial Equity Audits

In January, DiNapoli announced the filing of a shareholder proposal requesting independent and public examinations of corporations’ impacts on civil rights, equity, diversity and inclusion, and the impacts of those issues on the company’s business. The original proposal, filed with Amazon in 2021, won 44% support at the company’s annual meeting in May 2021. DiNapoli has re-filed with Amazon this year and filed similar proposals at Chipotle Mexican Grill, Dollar General Corp., Dollar Tree, Inc., and Match Group.

Board Director Votes

Voting on director nominees is a key tool that provides the most direct means for shareholders to hold companies accountable. The Fund believes its interests are best served by directors who demonstrate a commitment to sustainable long-term performance and responsible corporate governance.

Diversity Voting Guidelines

DiNapoli also announced today the adoption of updated Proxy Voting Guidelines that will expand the Fund’s scrutiny of board diversity, including diversity of age, race, gender, ethnicity, sexual orientation and gender identity, geography, and disability. As a result, the Fund will examine all Russell 1000 Index companies and vote against:

  • All incumbent board nominees if there are no directors identifying as an underrepresented minority on the board (as defined by federal Equal Employment Opportunity Commission, which includes one or more of the following: Black or African American, Hispanic or Latino, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or two or more of the preceding);
  • All incumbent nominating committee nominees when a board does not have more than one director identifying as an underrepresented minority;
  • All incumbent nominating committee nominees at companies that do not disclose the self-identified individual racial/ethnic diversity of their board directors; and
  • All incumbent nominating committee nominees at companies that have not listed both gender and racial/ethnic diversity as explicit considerations in their search for directors.

The Fund will also vote against all incumbent Compensation Committee members of S&P 500 Index companies for failing to disclose EEO-1 data to investors.

The Fund continues to encourage its portfolio companies to disclose whether directors identify themselves as LGBTQ+ or as a person with a disability. The Fund also plans to further expand its voting policy during the coming years.

Since 2018, the Fund has voted against all incumbent board directors standing for re-election at companies that have no women on their boards. In situations where a company has just one woman on its board, the Fund has withheld support from all incumbent members of the board's nominating committee.

About the New York State Common Retirement Fund

The New York State Common Retirement Fund is one of the largest public pension funds in the United States with an estimated value of $279.7 billion as of Dec. 31, 2021. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. The Fund has consistently been ranked as one of the best managed and best funded plans in the nation. The Fund's fiscal year ends March 31.