Under Prudential’s Corporate Governance Principles, the independent directors of the Board annually elect a Lead Independent Director for a term of at least one year, who may serve for no more than three years. I am honored that my fellow independent directors elected me to serve for the last three years. My term ends in May 2020, effective at our Annual Meeting. Our directors share my commitment to strong, independent leadership, Board effectiveness and oversight. In this context, I would like to share insights from the three years I served as Lead Independent Director.
What are the qualities that make Prudential’s Board unique?
I would describe Prudential’s Board as cohesive and collaborative. Our directors have developed mutual respect due to our common commitment to the Company and its stakeholders. Because we respect each other, we have developed trust. When contemplating appropriate director candidates, we look for skills that not only reflect today’s business environment, but importantly, individuals who possess experience that will help the Company maintain its leadership position as economic trends, technological advances, and customer demographics evolve.
How does the Board’s diversity cascade throughout the organization?
Diversity at Prudential starts with the Board. Eighty percent of our independent directors and two-thirds of all our directors are diverse.
Prudential has an inclusive culture. We recognize diversity makes Prudential a stronger business, leading employer, and better community partner. Fifty-three percent of our U.S. employees are women and thirty-one percent are people of color. Recognizing that diversity is imperative to the Company’s vitality, in 2018, we instituted a long-term incentive compensation modifier for the senior vice president level and above that is subject to a performance objective intended to improve the representation of diversity among senior management.
The Board conducts an annual evaluation administered by an independent third party. What are the benefits?
The Corporate Governance and Business Ethics Committee works with an experienced, third-party consultant to complement our internal evaluation efforts by introducing an objective perspective and knowledge of best practices. We believe a rigorous process by an independent third party is an essential component of good governance and benefits our shareholders. The Board evaluation also presents an opportunity for directors to share their opinions about the Board’s performance and areas for improvement.
How has the Board changed during your tenure?
Our Board is adept at succession planning. This is evident in our director tenure, which averages a little more than seven years. Since 2015, we have added directors with finance and capital allocation expertise, Asian market experience, as well as individuals with broad and deep histories overseeing global corporate operations.
Appreciating the value of risk oversight, we created a separate Risk Committee in 2015, where we oversee the governance of risk throughout the enterprise.
And finally, the Board is keenly focused on the organization’s commitment to sustainability. Our Corporate Governance and Business Ethics Committee has oversight for the Company’s environmental policy and social responsibility. In 2019, we strengthened Prudential’s Environmental Commitment with new sustainability goals.
This Board is focused on addressing the needs of our clients, cultivating an inclusive workplace for our global employees, building a strong and sustainable future and retaining our leading competitive position. Our people and culture have positioned us to meet these objectives, and we have never been more confident in our ability to create long-term value for our shareholders.
Thomas J. Baltimore
Lead Independent Director