Shareholder proponents have asked companies to make sure they do not discriminate again specific groups of employees for many years and from 2021 onward have pushed the envelope to ask for more information about diversity management, backed up by more data. This year, 38 ask about more information on diversity programs, or simple EEO-1 disclosure and six are about racism in the workplace. All but three are at new recipients. The number of proposals has dropped back from a high of 70 in 2021 and most of the 2022 proposals were withdrawn after companies agreed to report.

Proponents have included most prominently As You Sow, the New York City and State retirement systems and various social investment firms.

(Proposals on gender/minority pay equity are above under Decent Work, p. 44)

Analysis of diversity programs: As You Sow, NYSCRF and others are continuing an effort to obtain more information about how companies are managing their diversity programs, as they have before—and mostly at companies that have not received this request before (see table above). The proposal at 21 companies asks for a report

on the effectiveness of the Company’s diversity, equity, and inclusion efforts. The report should be done at reasonable expense, exclude proprietary information, and provide transparency on outcomes, using quantitative metrics, for hiring, retention, and promotion of employees, including data by gender, race, and ethnicity.

Three are resubmissions. At Berkshire Hathaway, a similar proposal received 25.9 percent in 2022 and 27.1 percent in 2021, at Charter Communications the votes were 44.7 percent in 2022 and 41.4 percent in 2021, while at UPS they were 36.8 percent in 2022 and 33.7 percent in 2021.

Withdrawals—Proponents have withdrawn after agreements at Bank of NY Mellon, Halliburton, Raytheon, Southern and Texas Instruments. Additional withdrawals seem likely since while it is new to Block, Phillip Morris International and Victoria’s Secret, all the other companies have received pay disparity or diversity resolutions before and often reached agreements.

INCREASE IN EEO-1 DATA REPORTING SHOWS POSITIVE LINK BETWEEN DIVERSITY AND FINANCIAL PERFORMANCE

MEREDITH BENTON
Principal and Founder, Whistle Stop Capital

JAYLEN SPANN
Lead Research Associate, Whistle Stop Capital

The U.S. Equal Employment Opportunity Commission (EEOC) requires that all companies with 100 or more employees confidentially submit a report, known as the EEO-1, which shows a company’s demographic workforce data by sex, race and ethnicity. For years, shareholder advocates including the NYC Comptroller’s office, Boston Trust Walden and others asked companies to release this data. In the summer of 2020, as investors and corporate leaders began to understand the extent to which discrimination pervades our economy, corporate disclosure of EEO-1 forms increased. From August 2020 to October 2022, the number of S&P 100 companies releasing EEO-1 data quadrupled.

SEC action—Only one company has lodged an SEC challenge. Eli Lilly is arguing the proposal is moot and ordinary business since it relates to workforce management, does not raise a significant social policy issue and would micromanage.

EEO-1 and human capital: NYSCRF filed a slightly different iteration new to both Brinker International and Universal Health Services, as discussed in a February press release from Comptroller Thomas DiNapoli, asking for a report:

on the outcomes of the Company’s diversity, equity, and inclusion efforts in its human capital management strategy, by providing comprehensive quantitative metrics and data on progress toward its goals. This includes disclosure of its EEO-1 Report no later than 60 days after the date of its submission to the EEOC as well as recruitment, retention, and promotion rates and pay data of employees by gender, race, ethnicity, sexual orientation, age, disability and veteran status.

EEO-1 data reporting: The Service Employees International Union (SEIU) has withdrawn a request seeking release of EEO-1 data at Maximus, which has agreed to provide the information but also had lodged an SEC challenge saying it was moot. SEIU in 2022 earned 64.1 percent for a proposal asking the company to report on its racial justice programs. (One more EEO-1 proposal is at an undisclosed company.)

Racism: NorthStar Asset Management for several years has asked companies to examine their workplaces for racism. It is asking the same thing this year, with a proposal at A.O. Smith and Digital Realty Trust to report “analyzing whether written policies or unwritten norms…reinforce racism in company culture and including any planned remedies.” A proposal last year at Digital Reality about harassment and discrimination earned 45.6 percent. The proposal quotes the definition of structural racism used by the National Museum of African American History and Culture and argues that ending racism would yield substantial economic benefits.

A second proposal new to proxy season from NorthStar addresses racism in hiring practices at Adobe, Badger Meter, IDEX and Xylem, with regard to the criminal justice system. It seeks a report within a year of the annual meeting that will analyze whether each company’s

hiring practices related to people with arrest or incarceration records are aligned with publicly stated DEI (diversity, equity, and inclusion) statements and goals, and whether those practices may pose reputational or legal risk due to potential discrimination (including racial discrimination) claims.

While IDEX and Xylem have not received any diversity proposals before, a gender/racial pay disparity proposal earned 12.5 percent at Adobe in 2020 and 33.3 percent in 2019. At Badger Meter, a NorthStar board diversity proposal narrowly focused on race earned 25.1 percent last year and a more broadly framed proposal got 85.3 percent the year before. The company did add one person of color to the board after the 2021 shareholder meeting, but last year NorthStar pointed out the board is still 89 percent self-identified “non-diverse” in terms of race or ethnicity.

Executive diversity: Trillium Asset Management has been working to persuade companies to make their upper echelon jobs more diverse for several years. It asks IPG Photonics this year to “set public company-wide, quantitative, and time-bound targets to increase the representation of women and minorities, particularly at the managerial and senior levels of the company.”

BIG OIL TAX DODGING, TRANSPARENCY AND STANDARDS

DIANE KEARNEY
Senior Legal and Shareholder Advocacy Advisor, Oxfam America

TIM HIRSCHEL-BURNS
Legal Fellow, Oxfam America

This year, Oxfam America and co-filers have filed a series of new tax transparency proposals at extractive industry giants ExxonMobil, Chevron and ConocoPhillips, requesting that the companies disclose country-by-country financial information in line with Global Reporting Initiative (GRI) standards. This disclosure would reveal key insights for investors seeking to evaluate a company’s risk profile, including information surrounding revenues, profits, losses and tax payments. The dangers that tax secrecy pose to shareholders are beginning to emerge: Scathing media critiques, expensive legal battles and a rapidly changing regulatory landscape render continued tax avoidance a serious risk for long-term investors.