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NYS Comptroller


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01/08/15, Contact: Press Office (518) 474-4015

DiNapoli: Monster Beverage Needs To Diversify Board

New York State Comptroller Thomas P. DiNapoli today announced that the New York State Common Retirement Fund (Fund) has filed a shareholder proposal with Monster Beverage Corporation calling on the company to report on plans to increase gender and racial diversity on its board. The Fund's proposal is co-sponsored by the Connecticut Retirement Plans and Trust Funds, The City of Philadelphia Public Employees Retirement System and Calvert Investments.

The filers hold combined shares of Monster Beverage with an approximate value of $57 million.

“It’s unsettling that Monster Beverage has ignored repeated, widespread investor support for increased board diversity,” DiNapoli said. “Company value and board diversity are linked. Businesses that rely on consumers should be particularly mindful that their boards should reflect the men and women who purchase their products. When a board fails to be responsive to its shareholders, it is often symptomatic of larger, systemic problems in the company’s governance.”

“For almost six years, Monster Beverage has failed to live up to its promise of diversifying its Board of Directors,” Connecticut State Treasurer Denise L. Nappier said. “In 2009, in response to investor pressure, it said diversity would be a factor in considering board nominees. It defies belief that the company’s directors have not identified one diverse candidate to serve on the board since then. It is past time for Monster Beverage to follow through on its commitment.”

“Monster Beverage Corp. would do well to seize the opportunity to create a more diverse board of directors. As long-term shareholders, The City of Philadelphia Public Employees Retirement System expects sustainable performance and the research shows diverse boards help achieve it. Board diversity is good for companies and good for shareholders. We urge Monster Beverage to take action in response to our proposal,” said Francis X. Bielli, Esq., Executive Director of the Philadelphia Board of Pensions & Retirement.

“Inclusive board nomination policies shouldn’t be buried somewhere only to collect dust,” said Shadé Brown, Sustainability Analyst at Calvert Investments. “Shareholders expect companies to follow-through on these commitments by actively including diverse candidates in their search process.”

The Fund’s request for a report on plans to increase diversity, which was also filed last year, asks that the board describe what steps it has taken or will take to include women and racial minority candidates in its nominee pool, and to expand director searches to include nominees from non-traditional sources.  The trend among corporate boards is toward longer director tenures, which leaves fewer opportunities for diverse candidates to enter the boardroom.

DiNapoli has joined the Thirty Percent Coalition and a broad group of institutional investors, foundations and women’s organizations in calling on Monster Beverage to increase diversity on its board since February 2013. The company has failed to respond. 2020 Women on Boards – a national campaign to increase the number of women on boards – urged shareholders to support DiNapoli’s proposal last year and weighed in on the lack of diversity at Monster Beverage with their 2020 Challenge call for Monster Beverage to ”add at least two women directors to their board.”

Numerous portfolio firms have adopted DiNapoli’s board diversity proposal in recent years. In 2012-13 the Fund filed with five companies: Leucadia National Corp., QEP Resources, Teradyne Inc. T-Mobile USA Inc. and Urban Outfitters, Inc. reaching agreements with all except Urban Outfitters, Inc. All five companies have since added diverse directors.

In 2013-14, the Fund filed board diversity proposals with five portfolio companies: NVR Inc., Meritage Homes Corporation, Steven Madden, Ltd., Urban Outfitters, Inc., and Monster Beverage Corp. The Fund’s Monster Beverage and Urban Outfitters proposals earned the strongest support, 40.2% and 33.4% respectively, of all board diversity proposals filed in the 2014 season.

Board diversity, board independence and board accountability are interlinked and DiNapoli has taken the opportunity to hold broader governance reform discussions with firms where he has filed diversity proposals.

A copy of the shareholder proposal is available here:

About the New York State Common Retirement Fund
The New York State Common Retirement Fund is the third largest public pension fund in the United States.  The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. The Fund has a diversified portfolio of public and private equities, fixed income, real estate and alternative instruments.



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