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Jun 10, 2024

Board matrix proposal attracts support among NextEra Energy shareholders

Resolution filed by the New York City Employees’ Retirement System

Four in 10 votes cast at NextEra Energy’s AGM backed a resolution calling for the company to release a board matrix, an increasingly common feature of companies’ proxy statements.

The proposal, filed by the New York City Employees’ Retirement System (NYCERS), requested that NextEra’s board disclose in the company’s proxy statement ‘each director/nominee’s self-identified gender and race/ethnicity, as well as the defined skills and attributes that are most relevant considering the company’s overall business, long-term strategy and risks, particularly with respect to climate change.

‘The requested information shall be presented in matrix format and shall not include any attributes the board identifies as minimum qualifications for all director candidates.’

According to an SEC filing, 40.6 percent of votes cast backed the resolution. Although not a majority – and a lower score than the same proposal had at last year’s AGM – such a level of support is generally regarded as significant among governance experts.

Many companies have in recent years begun offering greater information about their board in the company’s proxy statement, including presenting that information in a matrix. Governance Intelligence research conducted last year found that around two thirds of respondents at small-cap companies (63 percent) and large-cap firms (64 percent) said their firm’s proxy statement used a board matrix, while 76 percent of those at mega-caps and 81 percent of those at mid-caps said the same.

‘Investors believe a diverse board – in terms of relevant skills, gender and race/ethnicity – is an indicator of a well-functioning board,’ NYCERS writes in support of its proposal. ‘Among other benefits, diverse boards can better manage risk by avoiding groupthink. NextEra’s board sets the tone from the top and disclosure of a board matrix would signal to NextEra’s employees, customers, suppliers and investors that the directors themselves are practicing diversity and inclusion in NextEra’s boardroom.’

The proponent states: ‘We resubmitted this proposal in 2023 and it received 49 percent support. NextEra’s current disclosures, however, continue to hinder investors in determining the comparative strengths of individual directors and their self-identified race/ethnicity. Carbon-based sources account for roughly half of NextEra’s generating capacity, underscoring the need for a climate-competent board to oversee NextEra’s transition to a low-carbon economy…

‘A board matrix would enable investors to make better informed proxy voting decisions by providing them with consistent, comparable and accurate data concerning NextEra’s directors in a structured, decision-useful format.’

Board: Vote ‘against’
NextEra’s board had urged shareholders to vote against the proposal, writing in the 2024 proxy statement: ‘The board believes that adopting the shareholder proposal would not be in the best interests of the company or its shareholders because the board has included a matrix, by individual board member, of each director’s gender and skills and attributes that are most relevant to the company’s overall business strategy.

‘Since NextEra Energy has supplemented its disclosure about board members’ skills and attributes, the proposal is duplicative of the skills and gender matrix published in this proxy statement.’

It added: ‘The board agrees that a diversity of skills and attributes is a key quality of a well-functioning board and is important information for shareholders. Diverse board skills and attributes ensure appropriate board oversight. As such, the company provides detailed information regarding the board in its proxy statement and on its website. In this proxy statement, the company has enhanced its disclosure of board member skills and gender in a matrix format by current individual director…

‘The board acts as a collective body, representing the interests of all shareholders. While individual directors leverage their experience and knowledge, board decisions and perspectives reflect the collective wisdom of the group.’

A request for comment from NextEra was not returned immediately.

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...