May 27, 2013
DiNapoli Takes on Board Diversity at Urban Outfitters
Nomination of Spouse of Chairman and CEO not a Substantive Response to Request for Inclusive Process to Nominate Board Members
Shareholders at Urban Outfitters Inc. will vote Tuesday on a resolution requesting the company take steps to improve its poor record of accountability and diversity on its board of directors at the company’s annual meeting in Philadelphia. New York State Comptroller Thomas P. DiNapoli, trustee of the New York State Common Retirement Fund, noted that the nomination of Margaret Hayne, the spouse of Urban Outfitters Chairman, CEO and founder Richard Hayne, and an employee of the company for more than 30 years, to the board of directors failed to meet the resolution’s request for an open and inclusive candidate selection process.
“Urban Outfitters has closed its boardroom to women and minorities, which does not serve the company, shareholders or customers well,”DiNapoli said. “Research indicates a significant correlation between boards that are diverse and a higher firm value. Shareholders should see through the nomination of Margaret Hayne, the ultimate insider, and demand that Urban Outfitters take steps to promote a policy of board inclusiveness.”
The Fund and Calvert Investment Management’s resolution (PDF, Proposal 6, Page 22), is co-sponsored by the Connecticut Retirement Plans and Trust Funds, Portico Benefit Services and Mercy Investment Services. It calls upon Urban Outfitters to take reasonable steps to ensure that women and minority candidates are in the pool from which board nominees are chosen and to publicly commit itself to a policy of board inclusiveness. In its supporting statement, the resolution states:
An August 2012 Credit Suisse report (PDF) found that of 2,360 global companies surveyed over the past six years, investors in companies with one or more women on their board would have seen higher average returns on equity and better average growth than in those without.
The proxy advisory service Glass Lewis recommended that shareholders support the resolution and withhold support for Margaret Hayne because her nomination, “…does not adequately respond to shareholders’call for a more diverse board as her extremely close ties to the Company hinders her from offering a diverse experience or independent oversight.”
The resolution, filed by Calvert Investments in 2011 and 2012, received 22 percent and 39 percent shareholder support in those respective years despite directors and executives holding beneficial ownership totaling nearly 25 percent of Urban Outfitters shares.
DiNapoli has taken a comprehensive approach to the interlinked issues of board diversity, board independence and board accountability. In 2012, the Fund, in concert with the Thirty Percent Coalition wrote letters to all the companies in the S&P 500 that did not have any women on their board of directors. The letter encouraged management to pursue best practices and to use Calvert’s Model Charter Language for corporate nominating committees to shape policies and practices to achieve a more diverse and independent board.
In 2013, the Fund co-signed a similar letter to all of the companies in the Russell 1000 that did not have any women on their boards of directors. In addition, the Fund filed six shareholder resolutions on issues surrounding board composition, reaching agreement with four: Leucadia National Corp., QEP Resources Inc., Teradyne Inc., and T-Mobile USA Inc. (proposal originally filed with MetroPCS).
As of May 17 the Fund owned 324,700 shares of Urban Outfitters valued at $14.5 million.