Given the sensitivity of the issue, some may be grappling with how to approach gathering director diversity information. Investors are increasingly asking for board diversity disclosures, and earlier this week, ISS ESG announced that it’s including some director and NEO racial and ethnic diversity information in the proxy advisor’s data service offerings. A frequent suggestion heard at conferences is to add a question or two to the D&O questionnaire, which most know is not as straightforward as it sounds. A recent Bryan Cave blog discusses this conundrum.
For those that aren’t keen on including another question in the D&O questionnaire, the blog says boards could consider addressing self-identification disclosures during a board meeting or in private conversations, and documenting the results in an appropriate manner, although individual director consent would still be needed for disclosures. For those that might update the D&O questionnaire, companies could socialize the topic before circulating an updated questionnaire so they can understand whether directors wish to proceed. The blog includes this example of a possible D&O question:
‘If you are willing to provide this information, please self-identify up to three classifications of racial/ethnic/gender/other diversity characteristics. Please note that if you choose to provide this information, you consent to possible public disclosure of the information, including in the company’s proxy statement, on our website or in response to inquiries from analysts, shareholders or the media.’
Alternatively, a separate consent checkbox could be added to the D&O questionnaire if a company wants to include only the first sentence of the sample question in order to gather diversity data and instead give directors a separate option to self-identify without consenting to public disclosure.
-Lynn Jokela, TheCorporateCounsel.net September 17, 2020
