JP Morgan Asset Management (JPMAM), one of the five largest institutional investors, has
modified its proxy voting policies to push for improved diverse representation on company boards, as well as enhanced HCM disclosures.
- JPMAM will vote against the chair of the Nominating Committee when the gender and racial or ethnic makeup of the board is not disclosed. If individual directors do not choose to make such disclosures, aggregate data for the board is sufficient.
- JPMAM will vote against the chair of the Nominating committee if there is no gender or racial/ethnic diversity on the board. Recent retirement of relevant directors, a relatively new public company, or an ongoing search for a director are mitigating factors.
- JPMAM will consider shareholder proposals to disclose HCM data and processes on a case-by-case basis, but will vote against proposals seeking HCM disclosures the Board considers confidential or sensitive information.
- JPMAM will generally support proposals on disclosure of workforce demographics, including the EEO-1 report.
JPMAM joins
State Street in its use of a specific policy to vote against directors of non-diverse boards. BlackRock has also disclosed that they will vote against directors where the board lacks diversity, but those votes will not happen until 2022.
The voting policy on HCM is particularly significant, as in the past, we have not seen major investors issue much public support for proposals demanding EEO-1 disclosures. While JPMAM may be willing to consider a board’s rationale for holding some information confidential, they also have made it clear they expect boards to actively oversee HCM strategy, including a company’s management of its workforce (human resources policies and its code of conduct), use of full time versus part time employees, workforce cost, employee engagement and turnover, talent development, retention and training, compliance record, and health and safety.
It is worth noting that a
shareholder submitted a proposal asking JP Morgan to conduct a racial equity audit analyzing its own adverse impacts on nonwhite stakeholders and communities of color. The board opposed the proposal on the grounds that it currently had a process for engaging stakeholders and programs to address concerns from communities negatively impacted by racism (including customers and employees). The proposal received approximately 40% support from shareholders.
