When Impax launched the Pax Ellevate Global Women’s Leadership Fund in 2014, women held an average of 31 percent of board seats and 23 percent of management seats among companies in the Fund. With nine percent women on its board and 11 percent in executive leadership at the time, eBay’s gender profile fell too far below our standard to be included. Fast forward to November 2018: The Impax Gender Analytics team found that the representation of women on the board and in management at eBay had surpassed 30 percent, placing it among the highest-rated companies globally for advancing women into senior leadership positions and meeting our standard for entry into the Fund. How did eBay get from gender laggard, with only token representation of women in decision-making roles, to gender leader?
We know that greater diversity on corporate boards leads to better decision-making, oversight and improved company performance,1 and Pax World Funds has long used shareholder engagement as a way to better understand a company’s approach to gender diversity. Engagement also lets us suggest changes that we believe could make companies better investments over the long term.
Impax had identified board diversity as an area for improvement at eBay in 2013. Noting that there was just one woman among the company’s 11-member board of directors, we signaled our concern by voting our proxy against the three2 male nominees standing for election at eBay’s April 2013 annual meeting. After voting, we wrote to the chairman of the board to explain our position and request information about any actions the company was taking to consider diversity in board refreshment. The company did not respond, and the same scenario played out the following year.
Based on the company’s unresponsiveness to our outreach, the absence of a specific board diversity policy3 and our strong conviction that more diversity leads to better long-term performance,4 we, in collaboration with two other investors,5 filed a board diversity shareholder proposal at eBay in late 2014. The proposal requested the company produce a report to outline its plans to increase gender and racial diversity on the board.
Our goal was to have a productive dialogue with eBay, and the proposal opened the door to just that. During our conversations, the company recognized that it could more fully articulate the board’s commitment to diversity and took steps to amend its governance guidelines to commit to “actively seek out highly qualified women and individuals from minority groups to include in the pool” of board nominees.6 The company also agreed to include this language in its proxy statement.
By codifying this language into its governance documents, eBay sent a clear message to investors that boardroom diversity is a priority, and by disclosing it publicly, the board essentially positioned itself to remain accountable to this promise, an ongoing oversight function of any board. In fact, among the six best practices outlined by McKinsey to improve gender diversity on boards are (1) “set new principles for decision making (e.g. include women on every candidate’s seat)” and (2) “make a visible commitment to diversity with sustained action throughout the organization.”7
During the course of our engagement, eBay announced the appointment of Bonnie Hammer to its board.8 Because of these actions, we withdrew our proposal. Shortly thereafter, eBay nominated another woman — Gail McGovern — to its board.9 EBay’s pledge to seek diverse candidates remains active; while its board composition has undergone changes, primarily in connection with the company’s spin-off of PayPal, since 2015, three of the seven independent directors appointed to the board have been women,10 bringing the total number of diverse directors to four.
EBay’s executive leadership team has undergone a similar transformation since 2013 through a series of internal promotions and new hires. Today, there are five women on that team.
Seeking to build upon on our successful board diversity engagement with eBay, and in recognition of the tech industry’s longstanding struggle to recruit and retain diverse talent, in 2015 we co-filed11 a shareholder proposal requesting the company produce a gender pay equity report. Research has found that companies that are committed to pay equity and transparent about their pay equity efforts are better positioned to achieve greater gender diversity and attract and retain talented employees. The proposal received a significant level of support at eBay’s 2016 annual meeting, prompting the company to agree to conduct a gender pay equity analysis and publicly disclose the results. That action may have produced a halo effect, prompting other tech companies, including HP, to take steps to publicly address gender pay equity and related issues.
eBay continues to be transparent about its successes as well as challenges along its journey to greater diversity and inclusion: The company hired a chief diversity officer in 2017 and published its second Global Diversity & Inclusion Report, including the results of its second global study of gender pay equity, in April 2018. Needless to say, we were not surprised to see the company emerge from our analysis as a gender leader in late 2018. Over the last four years, eBay has positioned itself among the roughly 400 companies in the world that are doing the most to advance women, and we now hold the company in our Pax Ellevate Global Women’s Leadership Fund as a result.
The research is clear, but now we have even better evidence that companies with more diverse leadership teams outperform their less diverse peers — the results of our own fund.
1 Impax Asset Management. “Gender Research.” www.paxworld.com/category/research/gender/. Accessed 25 March 2019.
2 EBay began the process of declassifying its board and establishing the annual election of directors in 2013.
3 United States Securities and Exchange Commission. “Schedule 14A Information: Proxy Statement.” www.sec.gov/Archives/edgar/data/1065088/000119312514090232/d661450dprec14a.htm. Accessed 25 March 2019.
4 Impax Asset Management. “Gender Research.” www.paxworld.com/category/research/gender/. Accessed 25 March 2018.
5 Lead filers of this resolution were Trillium Asset Management and the New York State Common Retirement Fund.
6 eBay. “Governance Guidelines of the Board of Directors.” https://ebay.q4cdn.com/610426115/files/doc_downloads/corporate_governance/eBay_GovernanceGuidelines_031516.pdf. Accessed 25 March 2019.
7 Celia Huber and Sara O’Rourke, “How To Accelerate Gender Diversity on Boards.” McKinsey & Company. Jan. 2017.
8 eBay. “NBCUniversal Executive Bonnie Hammer Joins Our Board.” https://www.ebayinc.com/stories/news/nbcuniversal-executive-bonnie-hammer-joins-our-board/. Accessed 25 March 2019.
9 eBay. “eBay Files Proxy, Nominates 15 Directors for Election to Board.” www.ebayinc.com/stories/news/ebay-files-proxy-nominates-15-directors-election-board/. Accessed 25 March 2019.
10 United States Securities and Exchange Commission. “Schedule 14A Information: Proxy Statement.” www.sec.gov/Archives/edgar/data/1065088/000119312518118730/d393823ddef14a.htm. Accessed 25 March 2019.
11 Lead filer of this resolution was Arjuna Capital.
As of 01/31/19, eBay was 0.1% of holdings of the Pax Ellevate Global Women’s Leadership Fund.
Top 10 holdings of the Pax Ellevate Global Women’s Leadership Fund as of 01/31/19: Microsoft Corp. 3.5%; Canadian Utilities, Ltd., Class A 2.0%; American Water Works Co., Inc. 1.8%; Texas Instruments, Inc. 1.8%; Intuit, Inc. 1.8%; Wolters Kluwer NV 1.8%; Principal Financial Group, Inc. 1.8%; Cisco Systems, Inc. 1.8%; Bank of America Corp. 1.7%; Ulta Beauty, Inc. 1.7%. Holdings are subject to change.
The Impax Global Women’s Leadership Index is a customized index of the highest-rated companies in the world in advancing women’s leadership, as rated by Pax World Gender Analytics, and that meet key environmental, social and governance (ESG) standards, as rated by MSCI ESG Research. Companies are rated by Pax World Gender Analytics based on multiple criteria of gender leadership, including: representation by women on the board of directors and in executive management, woman CFOs, woman CEOs and whether they are signatories to the Women’s Empowerment Principles. Inception date of the Index is 02/28/14. A custom index calculated by MSCI. One cannot invest directly in an index.
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