MSA Safety

Founded in Pittsburgh in 1914, MSA originally stood for ‘Mine Safety Appliances’. This was changed in 2014 to ‘MSA Safety’ to reflect the broader range of products the company has developed. Today, MSA still manufactures products such as fixed gas and flame detection systems which are used across industry. They are also a leading manufacturer of self-contained breathing apparatus and fire helmets for firefighters as well as fall protection equipment for working at height.

Objective

For MSA Safety to improve its gender diversity by improving female board-level representation to at least 33%.

Background

We have previously engaged MSA Safety on the topic of gender diversity. In 2022, we used our voting rights to vote against the re-election of Lead Director, Robert A. Bruggeworth and wrote to the company explaining our dissatisfaction with less than 33% of board members being female.

We raised the topic again later that year during a call, and MSA mentioned a challenging period for making diverse hires, possibly due to the pandemic. It did, however, express intentions to make improvements and highlighted that a diversity metric had been included in the pricing a credit facility (meaning that the company would have to pay a higher interest rate if specified targets were not met).

Later, MSA’s 2022 Impact Report highlighted other diversity-related metrics, including 30% board diversity and 36% diversity at the executive leadership level.

Actions

We spoke to MSA Safety’s Chief Financial Officer and Investor Relations at the same conference the following year and took the opportunity to raise several ongoing engagement issues¹  as well as gender diversity.

Specifically, WHEB outlined how reporting all facets of diversity under a single metric does not allow a sufficiently detailed understanding of the different dimensions of diversity in the organisation. Instead, MSA should be aiming for a minimum of 33% female board-level representation, as well as improving representation of, and reporting on, other aspects of diversity.

Outcome

Milestone 2 - Company shares or agrees to disclose information on the issue.

Though we attempted to probe the company about whether there is an internal differentiation between measures of diversity, we remain concerned about MSA Safety’s strategy for improving diversity, and especially gender diversity at the board level. There is not only a moral case justifying the need for businesses to address diversity and inclusion concerns, but also a strong business case. Diversity at the executive-level has repeatedly been shown to improve the likelihood of financial outperformance². 

In its 2022 Impact Report³, MSA states that it defines diversity using U.S. Government Guidelines that define “individuals as diverse if they belong to one or more of the following groups: female gender, racial or ethnic minority, protected veteran class, or persons with a disability. Employees in multiple groups are only counted once”. However, there is no requirement to report all diverse individuals in a single metric.

Our concern is that a combined diversity metric represents a considerable lack of ambition from leadership to improve firm-wide diversity. This may indicate, at best, a weak understanding of the benefits experienced by more diverse businesses or, at worst, implicit bias causing a resistance against efforts to diversify the workforce. 

These concerns are further reinforced by the fact that, despite targets and supporting incentive structures, senior-led diversity continues to remain flat in recent years. As such, we continue to monitor developments at the company and are considering how to engage on this issue further.