Urban Outfitters Faces Proposal To Diversify Board
PHILADELPHIA (CBS) - When Urban Outfitters conducts its annual meeting in Philadelphia on Tuesday, a proposal is before shareholders to diversify its corporate board.
The proposal is put forth by the female treasurer of the state of Connecticut and a female CEO who leads a Maryland-based investment firm.
It urges the company to put women and minorities on its board of directors to catch the trend of diversity taken by other corporations.
But Lalitha Naveen, a finance professor and specialist on corporate governance issues from Temple University's Fox School of Business, says the proposal is a bad idea, "Forcing a firm to create diversity to add members on the board -- whether it be men or whether it be women just forcing it to create diversity -- I don't think it necessarily adds to firm value. In fact, it often will detract from firm value, because you're forcing the firm not to go out and find the best possible directors for the job. You're just forcing them to stick to some kind of template."
Naveen adds that, even if the proposal is adopted, it doesn't guarantee the CEO and his supporters won't "stack" the board with people who will do what he and board members want.
"They could equally well pick women who would not dissent with them or who would not disagree with them," Naveen says. "They could pick minorities for the same reason. So, I don't see what you can achieve by forcing this to happen. I am a little surprised that they don't have any women on board because it seems that in that industry a lot of companies do have women on board. "
Urban Outfitters has indicated it will oppose the resolution.
Reported by Mark Abrams, KYW Newsradio 1060
