Outcome: Successfully Withdrawn
Cree, Inc. does not have women on its board of directors;
Our company’s peers GT Advanced Technologies and Arrow Electronics have two women on their board of directors;
Hubbell, Inc. and Orion Energy Systems each have one woman on their board of directors;
A 2012 report by the business-led Committee for Economic Development entitled Fulfilling the Promise: How More Women on Corporate Boards Would Make America and American Companies More Competitive notes that the percentage of women on all U.S. corporate boards has been below 13% for a decade.
We believe that diversity, inclusive of gender and race, is an essential measure of sound governance and a critical attribute to a well-functioning board;
A growing body of academic research shows that there is a positive relationship between firm value and the percentage of women and minorities on boards.
RESOLVED: Shareholders request that the Board of Directors, consistent with its fiduciary duties:
- Take every reasonable step to ensure that women and minority candidates are in the pool from which Board nominees are chosen;
- Publicly commit itself to a policy of Board inclusiveness to ensure that women and minority candidates are routinely sought as part of every Board search the company undertakes;
- Publish a report by April 2014, at reasonable expense and omitting proprietary information, on its efforts to encourage diversified representation, inclusive of gender and race on the Board, and the manner in which the nominating committee or Board of Directors will assess the effectiveness of its efforts and policy.
Director and nominee diversity helps to ensure that different perspectives are brought to bear on issues, while enhancing the likelihood that proposed solutions will be nuanced and comprehensive.
According to recent studies from researchers at Hebrew University, Wellesley Centers for Women, University of Western Ontario and V. Kramer Associates, having a critical mass of at least three women directors is good for corporate governance.
According to an August 2012 report by Credit Suisse Research Institute, which evaluated the performance of 2,360 companies globally over the six years ending December 2011, companies with one or more women on the board delivered higher average returns on equity, lower leverage, better average growth, and higher price/book value multiples.
Cree states in its proxy statement that diversity of career experience, technical skills and industry background is considered by its Governance and Nominations Committees. Neither gender nor ethnicity is mentioned as factors in board nominee searches. Diversity is not stated as a consideration in Cree’s Corporate Governance Principles. Relative to sector peers, an increase in gender balance had not been realized by our company’s Board of Directors.
In our view, companies combining competitive financial performance with high standards of corporate governance, including a gender balanced board, are better positioned to generate long-term value for their shareholders.
For all the reasons above, we urge our fellow shareholders to vote in favor of this proposal.