With eyes on board diversity, a recent article in The Guardian caught my eye, as the headline said shareholders have been urged to vote out a board chair due to gender imbalance. As I read a little further, I was surprised to see that Glass Lewis has recommended the ouster of the board chair even though the board chair happens to be a woman. Although the company, Playtech, is a constituent of the FTSE 250 and UK based, the situation sends a message about how Glass Lewis could view a similar situation should it arise here.
Should Playtech’s chair be ousted, its board will be left with an even greater gender imbalance. What gives? According to the article, the board makeup includes seven members, two of whom are women, which is below the 33% target for board gender diversity. Although the target is voluntary, Glass Lewis takes a tough stance in holding the board — and in this case, the board chair — accountable for lack of progress on improving the company’s diversity:
While the government-backed 33% target is voluntary, Glass Lewis reprimanded Playtech for its failure to follow its peers and improve its boardroom gender diversity. The company is adding another male director at its upcoming meeting, which means women would only occupy a quarter of Playtech’s board positions. Women represented just 19% of senior management, while 39% of the firm’s employees were female.
Glass Lewis criticised Playtech’s stance on improving diversity at the company, saying that it had ‘failed to adequately outline any measurable diversity objectives, instead opting for boilerplate language which provides little insight into what strategy the board is employing to enhance diversity’.
The advisory group added: ‘The board has not disclosed any commitment to achieve the Hampton-Alexander Review targets within a defined time frame despite the company failing to achieve the same by the 2020 deadline.’
There’s likely more to the story than The Guardian was able to pull together for its article. Word to the wise for companies thinking that placing a woman in a board leadership role will appease Glass Lewis to the point of looking past other diversity shortcomings, that move probably won’t help. Also, ISS takes a similar stance for racial diversity. They’ll vote out a board leader even if they are from an underrepresented community.
-Lynn Jokela, TheCorporateCounsel.net May 26, 2021
