Board Diversity
RESOLVED: Shareholders request that the Board of Directors of World Fuel Services adopt a policy for improving board diversity (the “Policy”) requiring that the initial list of candidates from which new management supported director nominees are chosen (the “Initial List”) by the Governance Committee should include, but need not be limited to, qualified women and minority candidates. The Policy should provide that any third-party consultant asked to furnish an Initial List will be requested to include such candidates.
WHEREAS: Currently, World Fuel Services does not have any women on its Board of Directors and lags its peers with respect to board gender diversity.
A McKinsey study found that companies in the top quartile for gender diversity in corporate leadership had a 21 percent likelihood of outperforming bottom-quartile industry peers on profitability. Similarly, leaders in racial and ethnic diversity are 33 percent more likely to outperform peers on profitability.[1]
Adopting a policy that requires the consideration of women and minority candidate for every open director seat enhances the nomination process and assists the committee in developing a diverse board. A 2016 study published by Harvard Business Review found that including more than one woman or minority in a finalist pool changes the status quo to help combat unconscious bias among interviewers. Researchers found that the odds of hiring a woman were 79 times greater when there were at least two women in the finalist pool, and the odds of hiring a minority were 193 times greater when there were at least two minority candidates in the finalist pool.[2]
Many companies inadvertently narrow the candidate pool in new director searches by only considering CEOs and C-Suite nominees. Given that roughly 72 percent of CEOs on the Fortune 500 are white and male,[3] boards with “prior executive experience” policies are less likely to select women and minority candidates simply because there are less of these candidates to choose from. Looking beyond the C-Suite allows companies to augment their candidate pool with more diverse candidates.
Diverse search policies have been adopted by the Nominating and Governance Committees of Amazon, Facebook, Intel, Costco, Home Depot, Oracle, McDonald’s, Marten Transport, Marathon Petroleum, and United Continental. Additionally, key leaders in the business community support this policy direction. In its 2016 Principles of Corporate Governance, the Business Roundtable calls on boards to “develop a framework for identifying appropriately to consider women, minorities, and others with diverse backgrounds as candidates for each open board seat.”[4]
The proposal resembles the Rooney Rule in the National Football League (NFL), which requires teams to interview minority candidates for head coaching and senior football operations openings. In the twelve years before the Rule was implemented, the NFL had four minority head coaches and one minority general manager. Twelve years after, the NFL had sixteen minority head coaches and eight minority general managers.
While corporate boards may face different circumstances, it is difficult to ignore the positive impact of the Rooney Rule on diversity.[5]
[1] https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity
[2] https://hbr.org/2016/04/if-theres-only-one-woman-in-your-candidate-pool-theresstatistically-
no-chance-shell-be-hired
[3] http://fortune.com/2017/10/18/american-express-ceo-ken-chenault-black/