While shareholder advocacy can often bear the trappings of confrontation and debate, there are many examples of companies embracing suggested reforms brought to them by investors.  One story that captures this dynamic well is Trillium’s engagement with Westinghouse Air Brake Technologies Corp (Wabtec, NYSE:WAB) of Pennsylvania.

First, a little bit of background on the company.  Wabtec is a producer of products and services primarily for rail and transit industries, which has strong appeal from an environmental perspective.  As a key component of inter-city and metro public transit systems, the company can help support the urban transportation systems necessary to addressing energy and environmental challenges.  And rail provides one of the most fuel-efficient ways to transport freight.

However, the company is not without room for improvement.  In particular, Trillium has been concerned that the company has no women on its board of directors and until recently did not disclose whether diversity, inclusive of gender or race, was part of its board nominee search process.  As many people know, and many more are learning, numerous studies have underscored the nexus between greater board and management diversity and improved corporate governance and financial performance.  A 2012 study by Miriam Shwartz-Ziv concluded that boards with three or more women directors were roughly twice as likely to request further information and to take an initiative, leading to higher return on equity and net profit margins compared to peer companies.1  And a 2012 report by Credit Suisse found that, over a six-year period, companies with greater gender diversity exhibited less volatility in earnings and had better financial performance. 2

In addition, Trillium is deeply concerned about the social implications from having so few women in corporate leadership positions.  What impact does this have on career and life choices for today’s and future generations of women?  What is the negative impact on women’s social equality of this stratification at the highest echelons of the business world?

These findings led Trillium, starting in 2012, to file shareholder proposals at eight companies including a proposal at Wabtec asking it to “publicly commit itself to a policy of Board inclusiveness to ensure that women and minority candidates are routinely sought as part of every Board search the company undertakes.”

Happily, the filing at Wabtec led to a dialogue with Emilio Fernandez, Wabtec’s Chairman of the Board.  Even better, Trillium was able to bring to the table two important constituents, the 30% Coalition and the Deputy Treasurer for Pennsylvania, where Wabtec is headquartered.  The 30% Coalition is a national organization of 70 members (including companies and investors) working to increase the representation of women on boards by focusing on the demand side of the issue.  Their goal: to achieve a 30 percent representation of women across all public company boards by the end of 2015.

This dialogue, which occurred over several meetings during the 2013-14 winter, led Wabtec to amend its Corporate Governance Guidelines, Nominating & Corporate Governance Committee Charter and 2014 proxy statement to include a clear definition of diversity, inclusive of gender and race, and make diversity an intentional part of board nominee search criteria.

The cooperative nature of the dialogue is perhaps best captured in the words of the participants.  “Wabtec values constructive dialogue with its shareholders and commends Trillium for its dedication to shareholder issues,” said Albert J. Neupaver, Chairman and Chief Executive Officer.  “We are highly committed to principles of diversity as part of our drive to create sustainable value for all of our shareholders.  As part of this commitment our Board believes that a diverse membership with varying perspectives and experiences is an important Board attribute.”

And Pennsylvania Treasurer Rob McCord put it this way: “I’m proud that Wabtec —a company with deep roots in the Pennsylvania economy — agrees that a diverse board can lead to increased value to the company and its shareholders.  I also commend Wabtec for committing that future director searches will include diversity as a focus.”

Since the withdrawal of the proposal, the Board met in May to review search firms, the majority of which are women owned/managed, and will meet again in July to select one firm to complete the search for women candidates.  Wabtec’s board chair has also instructed board members to offer prospective woman candidates for consideration.  Trillium expects to engage with the company and gauge its progress later this year.  This dialogue has allowed us to open discussions on other topics with the company, the most recent being on adopting a comprehensive non-discrimination policy.

We very much hope and expect that Wabtec will follow in the steps of Cree, another company Trillium engaged with this past year.  In December 2013, following our engagement, the company named respected executive Anne Whitaker to its board.  We are confident Wabtec will move quickly to build a board with diverse talents and perspectives, inclusive of gender and race, to enhance the culture of innovation, and critical thinking in the boardroom.


By Susan Baker, Vice President, Shareholder Advocacy, Trillium Asset Management and Jonas Kron, Senior Vice President and Trillium’s Director of Shareholder Advocacy


1 Schwartz-Ziv, Miriam. “Does the Gender of Directors Matter?” November 2012
2 https://www.credit-suisse.com/newsletter/doc/gender_diversity.pdf