Following criticism from investor activists, technology juggernaut Apple is pledging to actively try to recruit more women and minorities to its board of directors.
Apple's eight-member board currently has one woman, former Avon CEO Andrea Jung, who is also the only director with a minority background. The company recently agreed to add language to its nominating and corporate governance committee charter saying that it is "committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which board nominees are chosen." The new language was adopted in November, but was first reported Monday following the release of Apple's preliminary proxy statement.
The pledge comes after efforts by two investor groups, the Sustainability Group and Trillium Asset Management, to propose a vote at the company's Feb. 28 annual meeting. The proposal would have asked Apple to take steps to ensure women were included among board candidates, said Larisa Ruoff, who heads up shareholder advocacy for the Sustainability Group. It was withdrawn after Apple adopted the new language. "We are very pleased with how the company has been responding," Ruoff said. (Apple did not respond to an e-mail requesting further comment.)
Efforts by shareholders to increase the number of women on boards have been a mixed bag in recent years. Governance research firm GMI Ratings reports that among U.S. and Canadian companies, there were 11 shareholder proposals calling for board diversity voted on during the 2011 proxy season, three in 2012 and nine in 2013. Still, Charlotte Laurent-Ottomane, the executive director of the Thirty Percent Coalition, a nonprofit advocating to increase female representation on public company boards, believes more shareholders are likely to attempt such proposals.
"Shareholders are deciding this is a business case; this is something that’s important," Laurent-Ottomane said in an interview. "Shareholders are going to be forcing the issue and asking for this kind of language, to treat diversity as a priority."
Apple is not alone in its low ratio of female directors. Catalyst, a nonprofit research organization that studies women's leadership, found recently that one-tenth of companies in the Fortune 500 have no women at all on their boards. Even among companies that do, the representation is far from equal. Women held just 16.9 percent of all board seats among Fortune 500 companies last year, essentially the same percentage as in 2012. "The business case for diversity is so unequivocal, it’s particularly concerning that progress is stagnating," Ruoff said. "The fact that more companies are not moving swiftly to address this issue should be troubling to all investors."
Both the shareholder groups and advocacy organizations see Apple's move as a step in the right direction. While Apple previously had diversity language in its proxy statement, said Jonas Kron, director of shareholder advocacy at Trillium, adding the language to its charter "demonstrates a little more seriousness." He calls it "the strongest short-term step they can take. We’re long-term investors. We have confidence in the company. We’re not parachuting in and expect things to dramatically change overnight."
Laurent-Ottomane, too, said the move shows commitment on Apple's part. "The fact that they put it in their charter is a goodwill gesture that they’re going to follow through. It goes beyond the handshake."
Jena McGregor is a columnist for On Leadership.