The New York City comptroller is looking to compel DraftKings to annually disclose the self-identified gender and ethnicity of its executives, and their most relevant skills.
The gambling company (Nasdaq: DKNG) revealed Wednesday in an SEC filing that New York City comptroller Brad Lander submitted the shareholder proposal on behalf of the New York City Police Pension Fund and the New York City Teachers’ Retirement Systems. Both pension funds are DraftKings investors, with more than $25,000 worth of stock.
The proposal for what’s commonly known as a “board matrix” will be up for a vote at the company’s virtual shareholders meeting on May 19. These matrixes were required by Nasdaq a few years ago, before a court terminated the obligation. The DraftKings board said in the filing that it unanimously recommends investors vote “no” on the proposal, calling it unnecessary and potentially harmful. CEO and co-founder Jason Robins currently holds about 89% of the voting power.
In its supporting statement, the funds said that they value “diversity and inclusion” and believe board diversity regarding gender, race and ethnicity is an indicator of well-functioning leadership because it mitigates risk of groupthink. They cited the difficulty of obtaining the requested data via photographs or research, and criticized DraftKings for its prior disclosures.
“In its 2024 proxy statement, [DraftKings] provides little decision-useful data with respect to how its directors’ individual qualifications fit together to effectively fulfill the board’s oversight responsibilities, nor is any director’s self-identified race/ethnicity disclosed,” the statement says.
The proposal comes as diversity, equity and inclusion (DEI) policies are under fire from Republicans across both the public and private sectors. U.S. President Donald Trump frequently criticized DEI efforts during his campaign, and has moved quickly to remove DEI efforts (and people supposedly hired under them) from government agencies. The pressure has expanded beyond the government, to universities and businesses.
Board matrixes are a common way for companies to give current and prospective investors a short-form breakdown of the board and its functions. In August 2021, Nasdaq began requiring companies listed on its exchange to disclose board diversity statistics, including gender and race/ethnicity. It also required companies without at least two diverse board members to explain its reasons. Those rules were vacated late last year following a 9-8 ruling by the U.S. Court of Appeals for the Fifth Circuit. (DraftKings’ board has multiple women and multiple people of color.)
“The matrix disclosure prescribed by the proposal can promote a check-the-box approach to refreshment, and may lead shareholders to incorrectly believe that only a subset of directors contribute to particular decisions or represent the board on particular matters,” the DraftKings board said in its statement of opposition. “Instead, the Board acts as a collective body, representing the interests of all shareholders. While individual directors leverage their experience and knowledge, we believe that Board decisions should reflect the collective wisdom of the group.”
A spokesperson for the company declined further comment.
It’s unclear if the New York City pension funds have made or plan to make similar shareholder proposals for other publicly traded companies in their portfolios. An email sent to Lander’s office wasn’t immediately returned. The comptroller announced earlier this year his candidacy for mayor in New York.
(This story has been edited to remove a reference to the New York State Teachers Retirement System, which was not part of the comptroller’s shareholder proposal.)
