Treasurer calls for more diversity on corporate boards to improve perspectives, increase long-term value
New database could boost gender, racial and geographic representation – and bolster Oregon
By Oregon State Treasurer
Across the varied landscape of public companies, the boards of directors who help call the shots are strikingly homogenous. According to a review of Fortune 500 companies by the Alliance for Board Diversity, those corporate boards were made up primarily of white males, who accounted for 74.5 percent of board seats in 2010. In addition, many individuals sit on the boards of several companies, meaning those companies may miss out on diversity of perspectives as well.
Oregon State Treasurer Ted Wheeler wants to help nudge companies to increase diversity on their boards of directors by adding more women and ethnic minority members. He’d also like to see more geographic representation, with more Oregonians helping to steer large companies.
“Oregonians have valuable leadership and expertise to offer, and I also believe we all will benefit from stronger relationships with leading companies,” said Treasurer Wheeler. “Companies will also gain by having diverse, independent, and well-qualified board members, from an array of personal and professional backgrounds.”
The Treasurer sent a letter this week to prominent Oregon business associations and to graduate business schools, introducing a new database that was created to help introduce corporations to potential new board candidates.
The Diverse Director DataSource was commissioned by two prominent California pension funds, CalPERS and CalSTRS, with input from the Oregon State Treasury. The database officially was opened for business in July.
Public companies are required to have boards of directors, but there are no guidelines as to the makeup of those boards. In recent years, active shareholders have pushed corporations to have boards be more reflective of the population. That’s not only because of a belief that a variety of opinions and backgrounds will help strengthen companies: Research suggests that those with more board diversity post stronger performance.
Applicants for the database are not guaranteed a board position, no matter how qualified. Rather, they become part of a resource that is available to companies looking for potential board members.
The Treasurer’s support of increasing board diversity is part of a larger effort to improve how companies structure themselves and do business. The attention on corporate governance also includes highlighting executive salaries and pushing companies to report what they spend on political activity. If companies are mindful of the best interest of shareholders, it will enhance long-term value and benefit investors like the Common School Fund and the Oregon Public Employees Retirement Fund, the Treasurer said.
The diversity database — including free self-nominations and subscriptions for corporations interested in viewing the candidates — is administered by an independent company, Governance Metrics International. As of August, the list had more than 400 names, and it was growing.
You can learn more and submit nominations at http://www.gmi3d.com/home.
The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies are overseen by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices. You can track Treasury-related news on Twitter at @OregonTreasury.