Burger King Shareholders Reject Resolution to Add Women to Board

When Burger King merged with the Canadian coffee and doughnut chain Tim Hortons in 2014, it had no women on its board of directors. Tim Hortons had three, but they did not join the board of the new combined entity, Restaurant Brands International, based in Ontario. OceanRock Investments, a major Vancouver-based investor in Tim Hortons that became a shareholder in RBI after the merger, decided that an all-male board was distinctly un-Canadian and put forward a resolution that would require the organization to adopt a plan to add more female directors, and more women in leadership generally, according to Jeff Green and Leslie Patton at Bloomberg:

Restaurant Brands International Inc.’s decision to base the merged company in Canada instead of Burger King’s former home in Miami makes the lack of female board members especially unwise, Pinto said. He contrasted it to newly elected Prime Minister Justin Trudeau’s pledge to ensure that half his cabinet members are women.

“It’s an odd position to take in Canada, because certainly board diversity and targeting an appropriate number of women representatives is a hot-button issue,” Pinto said in an interview. “They fairly and legitimately took over Tim Hortons, but why would you not continue with the policy Tim Hortons had in place?” …

For its part, Restaurant Brands said it has already modified its guidelines to make diversity considerations more apparent. Making a specific pledge to add women might hamper the flexibility to select the best candidates, the company said in an April proxy filing in response to Pinto’s measure.

The vast majority of RBI’s competitors, such as McDonald’s, Wendy’s, and Starbucks, have at least one female director. At this Thursday’s board meeting, investors rejected the resolution, but the pressure on RBI to diversify its leadership won’t end there, Green and Patton note:

The group 2020 Women on Boards, which seeks to have women represent 20 percent of directors at the largest companies, will target the Burger King owner on June 20 as part of a campaign to pressure companies with all-male boards, said Malli Gero, co-founder of the group. Among companies the group has targeted, and which later added women, are Facebook Inc., Urban Outfitters Inc. and Monster Beverage Corp., she said.

Shareholders are typically reluctant to pass resolutions mandating diversity in corporate leadership: In February, Apple investors voted down a proposal to require the company to aggressively pursue racial diversity in its board and C-suite. The argument organizations make to investors in these situations, which the investors usually accept, is exactly what Restaurant Brands said in its proxy filing: that such mandates might prevent the company from hiring the most qualified candidates.

But our increasing understanding of unconscious bias complicates this argument: All-male boards of directors often claim that the only reason they have no women in the room is that they can’t find any qualified female candidates, but this is dubious; a more likely scenario is that the qualified women just aren’t in these men’s networks, and the same is likely true for minorities. Research has also shown that boards are usually reluctant to replace a departing male board member with a woman. Systemic biases like these are a major reason why, even if the current rate of progress were to double, it would still take more than 40 years to reach gender parity in American boardrooms.