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May 01, 2011
Resolution Calls for Board Diversity at American Financial Group
    by Robert Kropp

Calvert and the Evangelical Lutheran Church request that the company, which has no women or minorities on its board or in senior management, adopt a policy to ensure that diversity is considered in board nominations.

In 2010, when the Securities and Exchange Commission (SEC) adopted new Proxy Disclosure Enhancements, the agency noted, "Disclosure about board diversity was important information to investors…there appears to be a meaningful relationship between diverse boards and improved corporate financial performance, and that diverse boards can help companies more effectively recruit talent and retain staff."

Yet despite the fact that, as stated in a 2010 report by Calvert Asset Management, 97% of S&P 100 companies have at least one woman and/or minority on their boards of directors, as do almost 80% of Russell 1000 companies, outliers such as American Financial Group persist.

"Currently, American Financial Group has no women and no minorities on its Board of Directors or within Senior Management," Calvert stated in a recent press release announcing that it and the Board of Pensions of the Evangelical Lutheran Church in America have field a shareowner resolution at the company, requesting that it "amend current director search procedures to increase the likelihood of adding diverse candidates."

The resolution states, "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…We believe our company's current board diversity policies and disclosures limit the company's definition and understanding of diversity."

The resolution requests that the company's policy ensures that women and minority candidates are routinely sought and that the company report to shareowners on its efforts to encourage board diversity.

Arguing that such a policy "could impede the Board's ability to select the most suitable and qualified candidates," the company recommended against support for the resolution.

"Despite a growing body of research showing that there is a significant positive relationship between firm value and the percentage of women or minorities on boards, American Financial Group remains unwilling to consider diversity as part of every search for director candidates," stated Aditi Mohapatra, Senior Sustainability Analyst at Calvert.

The company's annual meeting will be held on May 11.


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