Board Diversity

Resolution Text

WHEREAS:  The Ensign Group has one woman on its Board of Directors.

We believe that diversity, inclusive of gender and race, is a critical attribute of a well-functioning board and a measure of sound corporate governance.

Corporate leaders recognize the strong business case for board diversity. The Guiding Principles of Corporate Governance of the Business Roundtable, an influential association of chief executives, state: “Boards should develop a framework for identifying appropriately diverse candidates, which asks the nominating/corporate governance committee to consider women and/or minority candidates for each open board seat.”[1] Benefits associated with board and management diversity include a larger candidate pool from which to pick top talent, better understanding of consumer preferences, a stronger mix of leadership skills, and improved risk management. The Wall Street Journal reports that firms are seeking diverse representation in the boardroom in the wake of sexual harassment claims. [2]

Numerous institutional investors have amended their proxy voting guidelines to reflect their belief that diversity on boards, as well as in senior and mid-level management, is an indicator of good corporate governance. BlackRock, the world’s largest asset manager, published updated proxy voting guidelines in 2018 that stated, “we would normally expect to see at least two women directors on every board.”[3] State and city pension plans across the country have adopted proxy voting policies with minimum thresholds for board diversity.

Legislation mandating board diversity has arrived in the US. California legislation enacted in 2018 mandates gender diversity on the boards of companies with principal executive offices in that state and other states and municipalities are following suit.

Despite recent progress, particularly among the largest companies, women and people of color remain significantly underrepresented on U.S. corporate boards. 20 percent of companies in the Russell 3000 have all male boards. [4] Excluding S&P 500 companies, women account for just 19 percent of the directorships in the Russell 3000. And, among board members of Russell 3000 companies whose race was identified, non-white directors represent less than 11 percent.[5]

Making diversity the norm will require attention to the board search process and board refreshment.

Resolved: Shareholders request that the Board of Directors prepare a report by September 2020, at reasonable expense and omitting proprietary information, on steps The Ensign Group is taking to enhance board diversity beyond current levels, such as:

  1. Embedding a commitment to diversity inclusive of gender, race, ethnicity in governance documents;
  2. Committing publicly to include women and people of color in each candidate pool for board and senior leadership seats; and
  3. Disclosing the racial, ethnic and gender composition of the board in annual proxy statements.

We believe this report will foster Board accountability on this issue.

 

[1] https://www.businessroundtable.org/policy-perspectives/corporate-governance/principles-of-corporate-governance

[2] Vanessa Fuhrmans, Women on Track to Gain Record Number of Board Seats, Wall St. J. (June 21, 2018),   https://www.wsj.com/articles/women-on-track-to-gain-record-number-of-board-seats-1529573401.

[3] https://www.blackrock.com/corporate/literature/fact-sheet/blk-responsible-investment-guidelines-us.pdf

[4] https://www.weinberg.udel.edu/IIRCiResearchDocuments/2019/04/TCB-Corporate-Board-Practices-2019-FINAL.pdf

[5] ISS Analytics U.S. Board Diversity Trends in 2019

Lead Filer

Heidi Soumerai
Boston Trust Walden

Co-filer

Mary Sobecki
Needmor Fund
Ellen Dorsey
Wallace Global Fund
Mr. Stephen Viederman
Christopher Reynolds Foundation, Inc.