NYC Comptroller Scott Stringer Calls For Boards to Adopt 'Rooney Rule' on Diversity

Chris Gaetano
Published Date:
Oct 11, 2019

New York City Comptroller Scott Stringer, in a recent speech, called on 56 S&P 500 companies to adopt something similar to the NFL's "Rooney Rule," which would require, at a minimum, that the initial list of candidates for board seats and CEO positions include "qualified female and racially/ethnically diverse candidates" and that director searches include candidates from nontraditional environments such as government, academics or nonprofit organizations. 

"From day one, we’ve been laser-focused on the issue of diversity: why it’s good for business; why, here in New York City, diversity isn’t a buzzword—but an airtight commitment," said Stringer. 

In the letter he sent to each of the corporations, he said that a diverse board is usually a sign of strong corporate governance, and cited recent research showing links between board diversity and financial performance, such as one study finding that diverse teams were less prone to groupthink (and, not mentioned in the letter, less likely to make pricing mistakes and to replicate previous errors). 

Stringer, in his letter, emphasized that such policies do not dictate who should be hired, nor do they mandate an outcome. Further, he said that he does not intend for such policies to replace "robust internal succession planning." At the same time, he did encourage the companies to publicly disclose their processes and plans for increasing diversity at the leadership level. 

The initiative is the third part of a larger Boardroom Accountability Project which first launched in 2014. Its first phase saw the adoption of proxy access from six to, now, 600 companies; the second phase involved disclosing more details about board directors themselves. Each phase has been backed by more than just a polite request: In his letter, he noted that he is the investment adviser to, and custodian and trustee of, the New York City Retirement System, which manages more than $200 billion in assets, including long-term shares in many of the companies he addressed. Further, he cited his motivation as going beyond societal concerns, saying that he believe such moves can increase shareholder value, and thus the value of New York City's investments. 

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