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A.O. Smith

2021 Engagement case study: Gender diversity

A.O. Smith is a diversified manufacturer of efficient water heating equipment and water treatment solutions. The company enjoys brand recognition in the US and China especially. A.O. Smith has a comprehensive product line, within which there is a particular focus on the development of efficient products to heat and clean water for both residential and commercial purposes. This includes water heaters, heat pumps, reverse osmosis products, water filtration products, solar tank units and air purification products.


Engagement issue

Gender diversity

Engagement objective

To improve board-level gender diversity at A.O. Smith.

Scope and process

WHEB’s voting policy provides analysts with detailed voting guidance and a template for capturing and recording their decisions when voting at company AGMs.

Within this guidance, where a company has inadequate gender diversity on the Board which we consider to be less than 33% diverse, our policy is to Vote against the Chair of the Nomination Committee. AO Smith has historically had relatively poor gender diversity at Board-level and throughout the organisation. We have raised this issue directly with the company in our regular meetings with them and voted against the Chair of the Nomination Committee in 2019 and again in 2020 on the basis that the company had just two female directors (20%).

In 2021, AO Smith replaced a long-tenured male Director with a new female director. This brought the total number of female directors to 3 (30%). We are pleased with the new appointment which improves diversity and also improves independence on the Board. However, the company is still behind our target of 33% and so we continue to vote against the Chair of the Nomination Committee on this basis. We have communicated this to the company and look forward to further improvements in the coming years

Outcome: partially successful 

While the company has yet to meet our 33% target, the new Board appointment improves gender diversity and independence. Alongside this, the company has also improved wider disclosures on ESG issues.

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