Outcome: Successfully withdrawn after the company added gender diversity to its board and committed to governance document revisions.
WHEREAS: Stifel Financial does not have any women 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.
Stifel Financial states that it “nurtures a culture that values the diversity of its work force”. Yet, the company noticeably lags its peers on board diversity. Raymond James Financial, Charles Schwab and Piper Jaffray each have two women directors on their boards. Greenhill & Co. has one woman on its board. Ninety-two percent of S&P 500 boards include at least one woman; the average is two women directors (2014 ISS Board Practices Study).
The August 2012 Credit-Suisse Research Report Gender Diversity and Corporate Performance links board diversity to better stock market and financial performance (higher return on equity, lower leverage and higher price/book ratios). It suggests several explanations for this better performance including a stronger mix of leadership skills, improved understanding of consumer preferences (women control more than two-thirds of U.S. consumer spending), a larger candidate pool from which to pick top talent, and more attention to risk. In 2014, Credit-Suisse updated its research and observed similar results.
An October 2014 PwC survey of institutional investors representing more than $11 trillion in assets observed that “Nine out of 10 investors believe boards should be revisiting their director diversity policies, and 85% believe doing so will require addressing underlying impediments…” This is consistent with growing investor engagement with companies on board diversity, as evidenced by state and city pension fundssuch as CalSTRs and pension funds of Connecticut, New York City and New York State.
Investment firms are responding to growing interest from investors by developing investment strategies with a diversity lens. In 2014, U.K.-based Barclays launched an exchange-traded note based on an index of companies with female CEOs or directors. In the U.S., Bank of America, Morgan Stanley, and Pax World Investments offer similar investment vehicles.
The company’s primary objective is to be the advisor of choice by clients. Yet, with women estimated to be the primary wage earners in over 40 percent of U.S. households, and women’s control of personal wealth expected to grow to $22 trillion by 2020, according to the Family Wealth Advisors Council, we are concerned that Stifel’s board does not have representation of this important prospective client base.
Resolved: Shareholders request that the Board of Directors prepare a report by September 2016, at reasonable expense and omitting proprietary information, on steps Stifel Financial is taking to foster greater diversity on the Board including but not limited to the following:
1. Strengthened Nominating and Corporate Governance policies which embed a commitment to diversity inclusive of gender, race, ethnicity, in Board searches;
2. The inclusion of women and minority candidates in every pool from which Board nominees are chosen and our company’s plans to advance Board diversity ;
3. An assessment of challenges experienced and progress achieved.