Apple Pressured by Investor for Racial Diversity in Senior Ranksby
Company objects to what it calls micromanaging of recruitment
Percentages of blacks and Hispanics in management fell in 2015
Apple Inc. shareholders could make history next year by deciding whether the company should be forced to increase the number of non-white executives and directors, with a vote on a proposal the iPhone maker has tried to squelch.
A resolution submitted by an investor who lives in New York and London would require Apple to put more “people of color” in such high-profile roles to increase diversity. Apple told the Securities and Exchange Commission that it believes it doesn’t have to include the proposal in its proxy materials, contending it’s an attempt to “micromanage” recruitment. Apple also said that while it’s trying to attract minorities, “the company has no power to ensure that its recruits will accept offers.”
The SEC’s Division of Corporation Finance said in a Dec. 11 letter that the agency didn’t agree with the company. But it’s up to Apple whether to bring the matter to a vote at the 2016 annual meeting, which hasn’t been scheduled. The company could decide not to include the matter in its proxy. That could bring an enforcement action by the SEC. The agency declined to comment on the possibility, and Apple didn’t respond to e-mails and phone calls.
The proposal for an “accelerated recruitment policy” was submitted in September by Antonio Avian Maldonado II, who owns 645 Apple shares. He said he was spurred to act after looking at photos of the directors with his teenage son, who asked him why nearly everyone was white.
The board is “a little bit too vanilla,” said Maldonado, the creative director for Insignia Entertainment, a music company. “I want to nudge them to move a little bit faster.”
The SEC’s response to Apple’s objection, he said, “proves I’ve been saying something correct.” He said he was “a little bit shocked” at the company’s response to his proposal. “What do you mean it can’t be done?”
Diversity has been a hotly debated issue in Silicon Valley in recent years, with activists focusing on a dearth of minority and female engineers and executives in many of the biggest tech companies and hottest startups.
At Apple, the percentage of blacks and Hispanics in top positions has declined, according to the company’s website, with Hispanics at 6 percent last year, down from 11 percent in 2014, and blacks at 3 percent, down from 7 percent. Managers of Asian descent went to 21 percent from 15 percent.
Six of the eight Apple directors are white. Andrea Jung is Asian-American and James A. Bell, an African American, joined the board in October. Bell’s appointment is one of the signs that “Apple is moving in the right direction,” said Jesse Jackson, whose Rainbow PUSH coalition lobbies the tech industry to increase minorities in its ranks.
“There’s a lack of outreach,” Jackson said, though it makes financial sense for companies like Apple to “look like the marketplace for their products.”
While Apple is being pressured on its racial makeup, the company has demonstrated diversity elsewhere. Chief Executive Officer Tim Cook is openly gay and has come out in support of causes including marriage equality.
Shareholders in the U.S. have filed motions over the years asking that more women and non-whites be named to boards, but the one submitted by Maldonado is the first to make a specific recruitment demand about racial and ethnic groups, according to Edward Kamonjoh, head of the U.S. strategic research analysis at Institutional Shareholder Services in Washington. None of the 57 diversity resolutions that have gone to votes at publicly traded companies since 2000 have been approved, he said.
On Wednesday, Twitter Inc. announced that it had hired Apple’s global head of diversity, Jeffrey Siminoff, for a similar position. That sparked criticism of the social media site, which has taken flack for its lack of diversity. Siminoff is a white male.