Tiffany Draws Fire for Board Stacked With 70-ish White MenBy
Union-affiliated investor calls for female, minority directors
Retailer has been trying to reach more millennial customers
Tiffany & Co., the luxury-jewelry company that’s suffering from declining sales, is now facing criticism for a board marked by long tenures and a lack of diversity.
CtW Investment Group, a union-affiliated firm that often takes up corporate-governance issues, is calling on the New York-based company to consider more women and minority candidates. In a letter due to be sent to Tiffany Chairman Michael Kowalski on Friday, the investor also knocked the jewelry chain for having directors who have overstayed their welcome.
Five of Tiffany’s 12 board members are over 70, and the entire group’s average age is 67 years, according to the letter. That compares with 62.4 years for Standard & Poor’s 500 Index companies. The average tenure is more than 12 years, well above the 8.2-year average for the S&P 500, the firm said.
CtW argues that the aging board makes it difficult to react to trends and achieve a key Tiffany goal: reaching more millennial shoppers.
“Directors with lengthy tenure may become more complacent, and less likely to question the company’s operations in the face of these challenges,” CtW Executive Director Dieter Waizenegger said in the letter. “We worry that Tiffany has largely failed to recognize the pitfalls of a highly entrenched board.”
The group, together with its union-affiliated pension funds, owns less than a 1 percent stake in the chain. Tiffany declined to comment.
The retailer has no minorities on the board and just two women, representing about 17 percent of the total, CtW said. That compares with an average of 21 percent for the S&P 500.
Tiffany, known for packaging its jewelry in robin’s-egg-colored boxes, has struggled to revive sales. It abruptly removed Chief Executive Officer Frederic Cumenal in February, putting Kowalski in charge on an interim basis.
The company’s shares have risen more than 18 percent this year through Thursday, and were trading at $92.09 at 11:05 a.m. in New York on Friday.
The activist hedge fund Jana Partners added three directors to the board as part of a February agreement. But that shake-up stemmed from the investor exerting pressure on Tiffany -- rather than an attempt to add diversity.
At the time, Tiffany said it will limit waivers on its directors’ retirement age. That means one board member won’t stand for re-election this year -- and two more would have to leave in 2018. That gives the company an opportunity to replace retiring directors with more diverse executives, CtW said.
The firm said that if Tiffany fails to adopt a policy to consider women and minorities for the board, it may take measures, such as starting a campaign to urge shareholders to remove some directors.