Include Non-Management Employees on the Board

Resolution Text

WHEREAS: Our company’s employees, including management and top performing staff, are crucial to our ability to offer shareholders continued return on their investment. A 2018 Forbes article emphasized the need for retaining top employees by “focus[ing] on excellence in engagement”;

In August 2019, the Business Roundtable, an association of chief executive officers of America’s leading companies, issued a new Statement on the Purpose of a Corporation which emphasized “a fundamental commitment to all of our stakeholders.” Shareholders believe that fulfilling the Roundtable’s commitment to “Invest[] in our employees” could come from a direct line of communication between employees and the board;

In 2018, the Accountable Capitalism Act was introduced into the U.S. Congress to combat “America’s fundamental economic problems” such as companies’ failure to reinvest proceeds in their operations, including employees. The Act would require that “boards … include substantial employee participation … ensur[ing] that no fewer than 40% of [a board’s] directors are selected by the corporation’s employees.” Though our Company would not yet be considered a “large entity” under the Act, shareholders recommend the Company plan for such future growth;

Several European countries require employee representation on boards. Academic analysis of one such policy stated that it “offer[s] advantages for technical efficiency, skill development and knowledge generation through its protection of specific human capital investments”;

A recent poll found that a majority of Americans “would support allowing employees at large companies to elect representatives to those companies’ boards of directors…”;

Competitiveness in our sector is evolving quickly due to technology such as artificial intelligence, machine learning, and cognitive analytics. The Manufacturing Leadership Council lists the need to “attract, develop, train, retain, and inspire both the current workforce and the next generation of employees” as a “critical issue” for the manufacturing industry;

Shareholders believe that our company can advance long-term value creation through a board that includes non-management employee representation.

RESOLVED: Shareholders of Badger Meter urge the Board of Directors to prepare a report to shareholders describing opportunities for the company to encourage the inclusion of non-management employee representation on the Board.

SUPPORTING STATEMENT: The report should be prepared within one year, at reasonable cost and excluding proprietary and privileged information. The Board is encouraged to assess:

  1. Any legal, technical, practical, or organizational impediments to non-management employees gaining board nomination;
  2. Benefits and challenges associated with board membership of non-management employees;
  3. Opportunities or procedures through which non-management employees could gain nomination to the board, such as allocation of board slots or special board nomination processes for non-management employees, and any needed changes to corporate governance documents to accomplish such changes.

For purposes of this proposal, the term "non-management employees” should be understood to be employees that are neither management nor company executives. 

Lead Filer

Mari Schwartzer
NorthStar Asset Management