Legal & General Investment Management announced today in connection with its 2020 proxy voting policy updates that it will vote against combined CEO/chairs globally - expected to have the most significant impact in the US and France, with 47% of the S&P 500 and 53% of the CAC 40, respectively, currently employing a combined CEO/chair board leadership approach.
The newly released 2020 "Corporate Governance and Responsible Investment Policy" for North America provides (among other things) that LGIM:
- Will vote against the re-election of any director that is a combined Chair/CEO, and "strongly discourages" those companies that currently separate the CEO/Chair roles from combining them in the future
- Encourages companies in transition to permit retiring CEOs to act as a consultant to the board for a maximum one-year period in lieu of the retiring CEO assuming the Chair or a formal directorship role
- Expects companies undergoing a shift in structure or management or under severe stress, whose boards may be governed by an executive Chair, to commit to separate the roles within a short pre-set time frame and to appoint a deputy chair for that time period
LGIM also noted its intent to vote against the largest 100 companies in the S&P 500 and the S&P/TSX with less than 25% female board representation beginning this year. That policy will expand to all companies in the S&P 500 and S&P/TSX in 2021, with an expectation that all companies in the North American market will actively promote board and workplace diversity and attain at least 30% female board and senior management representation by 2023.
In support of this goal, LGIM expects all companies to disclose a breakdown - by geography, main skill set, and gender - of directors, executive directors, managers, and employees, and to take targeted actions to attain the minimum 30% target at the board and executive committee levels by 2023. The Policy also calls for companies to collect and report on ethnicity diversity at the board and senior management levels, and to disclose a diversity policy that includes "meaningful information demonstrating how the company is working on its challenges" to allow investors to evaluate the company's integration of diversity into its strategy, and its efforts and progress in this area.
The release includes numerous direct and indirect references to LGIM position papers on these topics and other areas of emphasis in LGIM's 2020 Policy, including:
See this fn article, and our prior reports: "LGIM's Voting Record Reflects More Stringent Governance Standards," "LGIM Ups the Ante on Board & Senior Management Diversity (& More)," "LGIM Moves on Board Diversity, Pay Equity, Climate Initiatives," "Legal & General Voted Against 42% of Pay Proposals in 2016," "Legal & General: Board Refreshment Expectations," and "Legal & General: New Pay Principles Address Pay Inequality."