Proxy Alert: Restaurant Brands International – Shareholder proposal on board diversity

By May 2, 2017News, Proxy Alert

 

Restaurant Brands International
Symbol: QSR (TSX/NYSE)
Annual Meeting Date: June 5, 2017
Filer: OceanRock Investments (Meritas Jantzi Social Index Fund), facilitated by SHARE

Recommendation:
FOR shareholder proposal at Restaurant Brands International

Gender diversity is a critical attribute of a well-functioning board and a measure of sound corporate governance. Boards of directors of firms listed on the Toronto Stock Exchange are currently required by securities regulators to report on the number of women on the board and in executive officer positions. Companies must also report on whether or not they have a policy to increase the number of women in leadership positions.

Last year OceanRock Investments Ltd. filed a shareholder proposal at Restaurant Brands International (RBI) asking the company to adopt and publish a formal, written board diversity policy by December 2016. The proposal also asked RBI to report to shareholders on the board’s plans, timelines, process and activities for increasing gender diversity on the board of directors and amongst senior management. The 2016 proposal received 16.5% of the total shareholder vote which, by our estimation, represented 55% of the non-controlling shareholder vote.

In response to that proposal, RBI made changes to the Charter of its Nominating and Corporate Governance [NCG] Committee “to consider diverse candidates in terms of race, gender, geography, thought, viewpoints, backgrounds, skills, experience, and expertise.” It said that “any search firm retained to assist the NCG Committee in seeking new director candidates for the board will be instructed to seek to include diverse candidates who possess these qualifications and criteria.”

These changes do not address in any meaningful way the company’s plans, timelines and activities for increasing gender diversity on the board and senior management, or identify effective processes and indicators for developing and advancing women candidates for the board and senior management.

Following the 2016 Meeting, the company also expanded its board and appointed one female director. However the new director is the daughter of current RBI director and 3G Capital founder Carlos Sicupira. 3G Capital is the hedge fund controlling shareholder of RBI, and Sicupira’s daughter sits on multiple corporate boards with him. This suggests that the new appointment does not truly address shareholders’ concerns about increasing diversity and independence on the board.

OceanRock Investments Ltd., working with SHARE, filed a shareholder proposal for the 2017 annual shareholders’ meeting of RBI again asking the board of directors to adopt and publish a formal, written board diversity policy by December 2017 and to report to shareholders on the board’s plans, timelines, process and activities for increasing gender diversity on the board of directors and amongst senior management.

RBI’s board has declined to make a vote recommendation with regard to this shareholder proposal. The board says that it “believe[s] that our current practices, including the enhancements to our new director candidate selection process adopted last year, support board diversity” and notes that four members of its senior management team, and the above-mentioned new director, are female.

To date the company has not addressed in any meaningful way its plans, timelines and activities for increasing gender diversity on the board and senior management. It has not indicated that the board has a goal of actually increasing its diversity, or that it will use effective processes and indicators for developing and advancing women candidates for the board and senior management. Given the increasing interest by shareholders and Canadian securities regulators in advancing gender diversity in Canadian boardrooms and executive suites, the board should develop and report on a more detailed, systematic plan for achieving gender diversity within set timeframes.

SHARE recommends voting FOR this proposal.

Link to full proposal: http://share.ca/share-proposals/adopt-and-publish-a-formal-board-diversity-policy/

For more information contact:
Kevin Thomas
Director of Shareholder Engagement
Shareholder Association for Research & Education
kthomas@share.ca
416-992-5392

For copy of proxy advisory notice in PDF format, click here.