The Advisors' Blog

I blogged yesterday about the annual update to State Street Global Advisors’ voting policy. As I mentioned, there were no changes to the description of factors that SSGA considers in its say-on-pay analysis, but the policy no longer says what happens if SSGA determines that pay & performance are misaligned. Dave shared a similar shift about board diversity yesterday on TheCorporateCounsel.net.

Bigger picture, as Dave mentioned in his blog, and as called out in the “Introduction to the 2025 Proxy Season” published by SSGA along with its new policy, these are only a couple of examples of SSGA continuing to describe certain expectations for disclosure, etc. – but the policy no longer indicating what happens if a company falls short. Except with respect to whether it will support certain shareholder proposals, SSGA has moved away from “specific potential voting outcomes.”

Compensia’s Hannah Orowitz reached out to highlight another example – which compensation committee chairs will want to know. When it comes to publishing EEO-1 reports, the 2025 policy says:

We expect disclosure on the composition of both the board and workforce.

Previously, the policy had said that SSGA may vote against the chair of the compensation committee at companies in the S&P 500 that don’t disclose their EEO-1 reports. SSGA had also encouraged non-U.S. companies to disclose EEO-1 information in alignment with SASB guidance and nationally appropriate frameworks.

Without the bright line voting standard, it’s unclear what will happen if a company fails to comply with policy expectations. The jury is out on whether that’s a good or bad thing for companies – though some are predicting that we may see a broader pullback in transparency. It’s also possible that the general “anti-diversity” environment will discourage some employees from even participating in demographic surveys. If that happens, companies will need to continue to consider whether the data they publish is an accurate representation (or has appropriate disclaimers), and investors will need to continue to consider whether the data is useful.

For now, though, it’s unlikely that calls for workforce demographics will completely disappear. For example, SSGA’s policy continues to list publication of workforce and board demographics as a factor in its assessment of proposals that call for enhanced DEI disclosures, although this year’s policy does not go into as much detail as last year’s as to what that disclosure should look like.

SSGA also considers the role of the board in overseeing workforce demographics, DEI-related efforts, etc. in assessing other disclosure-related proposals, including on the topics of human capital management, DEI, pay equity – but some companies may have more flexibility in responding to proposals than in prior years. That’s because for all disclosure-related shareholder proposal topics that the policy covers, SSGA says it will only assess the proposal if the company has determined the topic is material:

As outlined above, the pillars of our Asset Stewardship Program rest on effective board oversight, quality disclosure and shareholder protection. We are frequently asked to evaluate proposals on various topics, including requests for enhanced disclosure. Where a company receives a proposal on a topic that the company has determined is material to its business, we will assess the proposal in accordance with the below criteria that we believe represent quality disclosure on commonly requested disclosure topics. In each case, in assessing the proposal against the applicable criteria, we may review the company’s relevant disclosures against industry and market practice (e.g., peer disclosure, relevant frameworks, relevant industry guidance).

– Liz Dunshee