1. How does the board ensure it is choosing the most qualified directors from the widest possible pool of talent, including women, people of color, and individuals with the widest possible range of skill sets and backgrounds?
2. Why does the board believe that the current composition of directors possesses the right skills and experiences to meet the challenges facing the company today and into the future? What gaps exist?
3. How does the board provide for its continual refreshment with outside perspectives and allow for the replacement of directors who are underperforming or whose skills are no longer optimal to meet the company’s needs?
What Asset Owners Can Do
Asset owners who engage asset managers rather than investing directly can also get involved. Those with sufficient resources may choose to bring proxy voting and shareholder engagement in house. Others with separately managed accounts may establish proxy voting guidelines for managers who are voting on their behalf. All can raise questions with their asset managers about how issues of diversity are addressed through portfolio selection, proxy voting and corporate monitoring, and even use these as part of the overall criteria for manager selection and retention.
John Wilson is head of corporate governance, engagement and research at Cornerstone Capital Group.