Santander Consumer USA, the U.S. subsidiary of Spain’s Banco Santander, received a shareholder proposal requesting that the board prepare a report on the risks of racial discrimination in its vehicle-lending business and any steps the company has taken to prevent such discrimination.
In our engagement, an executive explained that the proposal sought information the company already made public in its regulatory filings and on its website and that its fair-lending policy enabled the company to effectively oversee and manage risks similar to what the proposal outlined. But our analysis found that the company’s reporting provided a bare minimum of detail and lagged peers’ disclosures. In addition, the complete fair-lending policy isn’t made available to investors. Furthermore, given the company’s recent history of paying fines to settle charges of predatory lending, we view the proposal as addressing a material risk. Given those points, we deemed the proposal appropriate, and we felt it gave the company an opportunity to publicly share important information about how the board carries out its oversight duties. The funds supported the proposal—as did other shareholders—but ultimately the proposal failed to gain sufficient support given that the parent company controls a majority of the shares. We plan to revisit this topic in future engagements, delivering our views directly to board members.