Move to Install Wife of Urban Outfitters CEO Should Not Deter Support for Vote on Board Diversity
BETHESDA, MD. ///May 24, 2013///Calvert Investments, the New York State Common Retirement Fund, and the co-sponsors of a corporate diversity shareholder resolution that will be considered next Tuesday at the Urban Outfitters (URBN) annual meeting are cautioning that the planned appointment of the wife of the retailer's CEO to the board should not cause any serious-minded investor to waver in support of the move to identify women and minorities for the company's board of directors who are both qualified and independent.
Momentum favors a strong vote in 2013 at Urban Outfitters, where the same corporate diversity resolution garnered 22 percent support in 2011 and a considerably stronger 39 percent in 2012.
In what appears to be a move to blunt growing shareholder unrest about its opposition to corporate diversity, Urban Outfitters management has announced that it would add a woman to its board—but the nominee is Margaret Hayne, the wife of Urban Outfitters CEO and founder Richard Hayne. Resolution sponsors and co-sponsors have noted that the move is flawed since it appears to be tokenism and it fails to meet the generally accepted standards for board member independence.
The 2013 shareholder resolution—"6" on the Urban Outfitters annual meeting ballot—is sponsored by Calvert Investment Management, Inc. and the New York State Common Retirement Fund, and co-sponsored by the Connecticut Retirement Plans and Trust Funds, Portico Benefit Services/A Ministry of the ELCA, and Mercy Investment Services.
Barbara Krumsiek, president and CEO, Calvert Investments, said: "Women and minorities play increasingly significant roles in today's marketplace, accounting for more buying power than ever before.While Margaret Hayne certainly has the qualifications and experience to represent women's interests, she unfortunately does not satisfy other important governance criteria, namely director independence. Introducing independent women and minorities into the boardroom will further facilitate innovation in director discussions by injecting new perspectives, skills and experiences that may very well not be present on a board that lacks diversity and/or independence."
Christine De Groot, associate sustainability analyst, Calvert Investment Management, Inc., said: "As a clothing retailer with three brands that exclusively target women—Anthropologie, Free People, and BHLDN—Urban Outfitters should re-evaluate its position and adopt a formal process that seeks to identify and nominate independent women and minorities to serve on its board of directors."
Connecticut Treasurer Denise L. Nappier said: "It is time for Urban Outfitters to stop equivocating and embrace the merits of having a bona fide diverse board of directors. The manner in which the company board is currently handling this issue is a calculated insult, and reinforces the need to change its culture. Our shareholder diversity resolution has, at its core, the recognition that a truly diverse and independent board -- one that includes women and minorities -- is ultimately good for Urban Outfitters' business and long-term shareholder value. As principal fiduciary of the $26 billion Connecticut Retirement Plans and Trust Funds with investments in this company, that is what I care about and not bogus representation of diversity."
The resolution posed to Urban Outfitters' shareholders notes the following: "Urban Outfitters does not have any women or minorities on its Board of Directors... [The] company's primary competitors, The Gap Inc., Nordstrom, Inc., and Abercrombie & Fitch, have at least one woman and/or racially diverse member on their board of directors... Over 80% of the companies in the Russell 1000 Index have at least one woman on its board of directors, as do 90% of the companies in the S&P 500 Index, and 95% of the companies in the S&P 100 Index... We believe that diversity, inclusive of gender and race, is an essential measure of sound governance and a critical attribute to a well–functioning board ... A growing body of academic research shows that there is a significant positive relationship between firm value and the percentage of women and minorities on boards..."
The resolution calls on the Urban Outfitters board to "take every reasonable step 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..."
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Calvert Investment Management, Inc., 4550 Montgomery Ave., Bethesda, MD 20814