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

DiNapoli Seeks Increased Diversity at Pension Fund's Portfolio Companies

State Pension Fund Seeks Corporate Action on Discrimination and Racial Equity
Chipotle to Conduct an Independent Racial Equity Audit

February 15, 2023

New York State Comptroller Thomas P. DiNapoli today announced a series of shareholder proposals and other initiatives as part of the New York State Common Retirement Fund’s (Fund) ongoing efforts to increase corporate accountability for progress on diversity, equity and inclusion (DEI) issues.

“We encourage the Fund’s portfolio companies to ensure diversity, equity and inclusion throughout their businesses not just because it is the right thing to do, but because they will be better positioned to prosper in the long-term,” DiNapoli said. “As a major investor, focused on safeguarding our pension fund’s long-term value, we call on portfolio companies to adopt best practices that benefit their bottom line. More and more companies are making real progress, but more work needs to be done.”

“Harassment and discrimination, too often swept under the rug, can have a corrosive effect on work environment and threaten the reputation and success of companies,” said New York City Comptroller Brad Lander, who co-filed two of the shareholder proposals on behalf of the NYC Retirement Systems. “As shareholders, we believe that it does not serve companies or their workers to maintain a culture of secrecy about these negative experiences in the workplace. What cannot be discussed cannot be addressed. We are proud to join Comptroller DiNapoli and the New York State Common Retirement Fund to ask these companies to publicly report on the outcomes of their efforts to prevent harassment and discrimination and hold these employers accountable for their efforts.”

Companies — and their shareholders — benefit from DEI and policies that ensure hiring from the deepest pool of talent. To encourage companies to improve their practices and, by extension, their long-term value, DiNapoli and the Fund have filed a series of shareholder proposals that ask portfolio companies to increase their transparency and address the risks that come with a failure to uphold inclusivity and diversity.

Racial Equity Audit

At Chipotle, DiNapoli refiled a shareholder proposal seeking an independent audit of the company’s practices related to civil rights, racial equity, diversity and inclusion, and how these affect the company’s business. Last year, the proposal won 36% support from Chipotle’s shareholders. Last week, Chipotle announced the commencement of an independent third-party audit, joining Amazon, Dollar General, Dollar Tree and Match Group who adopted the pension fund’s proposal last year. As a result of the company’s action, the proposal has been withdrawn.

Workforce DEI Reporting

DiNapoli’s shareholder proposals filed at Universal Health Services, Inc. and Brinker International, Inc. ask the companies to disclose progress they have made on improving DEI in their workplaces. 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.

Disparities in Health Care Outcomes

DiNapoli advanced two new initiatives focused on health care equity. Proposals filed at Humana Inc. and Elevance Health Inc. seek an analysis of racial and ethnic disparities in healthcare outcomes. DiNapoli and the Fund ask that these reports detail the extent of racial and ethnic disparities identified, along with information about any impediments faced in collecting this data and the efforts the companies are making to eliminate the disparities and improve healthcare results. Since filing, the Comptroller has reached an agreement with Humana, which has agreed to publish a report on identifying and addressing racial and ethnic health disparities. The proposal has been withdrawn from Humana as a result.

Separate proposals, filed at two Fortune 500 health care companies — Centene Corporation and Molina Healthcare, Inc. — ask the companies to include reductions in maternal morbidity (death or unexpected severe outcomes after labor or delivery) as part of their performance evaluations that determine senior executives’ compensation. According to the U.S. Centers for Disease Control and Prevention, Black women are three times more likely to die from a pregnancy-related cause than White women.

Discrimination and Harassment Disclosure

Corporations must proactively address the corrosive effect that discrimination and sexual harassment have on workplace rights, morale, and company performance. DiNapoli has filed proposals with Activision Blizzard, Inc., Pinterest, Inc., and Wells Fargo Company — companies that have been impacted by allegations of discrimination or harassment. The proposals ask the companies to publicly report on their efforts to prevent harassment and discrimination, including the number of pending complaints, the number and dollar amounts of recent settlements and the number of enforceable contracts that contain concealment clauses that restrict discussion of harassment or discrimination. The proposals at Pinterest and Wells Fargo were co-filed by Lander and three of the NYC Retirement Systems.

In addition to these shareholder proposals, DiNapoli is writing to companies in the Fund’s portfolio requesting information about board and workforce DEI policies and practices. The letter expands on his August 2020 request that companies embrace improved policies. The letters will be sent to 75 of the largest Russell 1000 index companies that lack sufficient board diversity according to the Fund’s Proxy Voting Guidelines. Companies receiving the letter include JPMorgan Chase & Co., Costco Wholesale Corporation, Netflix, Inc., Citigroup Inc., Moderna, Inc., Dell Technologies, Inc., and Caesars Entertainment, Inc.

Board Votes

The Fund believes in the importance of board diversity as an essential measure of sound governance and a critical attribute of a well-functioning board of directors. At board elections of Russell 1000 companies, the Fund, in accordance with its Proxy Voting Guidelines, will vote:

  • Against all incumbent board nominees at companies with no board directors identifying as an underrepresented minority (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);
  • Against all incumbent nominating committee nominees when a board has just one director identifying as an underrepresented minority;
  • Against all incumbent nominating committee nominees at companies that do not disclose the self-identified individual racial/ethnic diversity of their board directors; and
  • Against all incumbent nominating committee nominees at companies that do not explicitly consider both gender and racial/ethnic diversity in their search for directors.

The Fund believes that disclosure of EEO-1 data helps investors assess their portfolio companies’ commitments to greater inclusion not just in a given year, but over time and will vote against all incumbent compensation committee members of Russell 1000 Index companies that fail to disclose EEO-1 data to investors.

Since 2018, the Fund has voted against incumbent board directors seeking re-election at companies that have no women on their boards. When a company has just one woman on its board, the Fund votes against 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. 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. It has consistently been ranked as one of the best managed and best funded plans in the nation.