Apple Holders Reject Proposal to Require Minorities in Top Ranksby
Investor says he'll try again in 2017 as 5% back measure
More frequent diversity proposals likely ahead, ISS says
Apple Inc. shareholders rejected a proposal that would have required the company to accelerate recruiting of minorities to senior executive and board positions.
The resolution, which got 5.1 percent of votes cast by proxy before those in the room at today’s annual meeting were tallied, was the first U.S. company action focused only on racial diversity.
Apple had urged holders to reject the measure, which it characterized as "unduly burdensome and not necessary." Apple’s eight-person board includes two women, Andrea Jung and Susan Wagner, and one African-American man, James Bell, who joined the board in October.
Among those voting against it was the California Public Employees’ Retirement System, the largest U.S. pension fund with about $280 billion under management, which said this month that it would make diversity one of three priorities for its activism in 2016. In a posting on its website yesterday, Calpers said it was voting against Shareholder Proposal No. 6 because "we believe the company’s current disclosures and activities related to diversity and inclusion meet the request of the proposal."
The Apple proposal was put forth by Tony Maldonado, an individual investor with just 645 shares, who said he began thinking about diversity after his teenage son asked him why the company’s board was almost all white. "Diversity at Apple isn’t solely a social issue; it’s also a bottom-line financial issue," Maldonado, who’s of Dominican ancestry, wrote in an editorial in the Latin Post this month.
Maldonado said since the votes in favor were more than 3 percent he can resubmit the proposal next year if he doesn’t work out some kind of agreement with the company before then.
"I’m quite happy that we got over 5 percent,” he said in an interview after the meeting. “That’s fantastic."
Although the measure failed, it’s a sign of the increasing pressure on U.S. companies to show a more varied face to the world.
"Board diversity proposals such as that at Apple are becoming both more frequent and more significant," said Edward Kamonjoh, head of U.S. strategic research at ISS Institutional Shareholder Services, the proxy advisory firm. ISS advised its clients to vote against the proposal.
He cited a "dramatic increase" in such proposals starting in 2013, as a result of the campaign by the 30 Percent Coalition, a group of 80 companies and organizations aiming to place more women on public company boards. About 80 percent of such proposals have been withdrawn before they were voted on because the company took relevant action.
“Greater boardroom diversity has also gained traction with corporations, which have shown an increased tendency to negotiate with shareholder proponents, " Kamonjoh said.
A total of 29 U.S. companies have diversity proposals on their proxy agendas for 2016, and, so far, five have been withdrawn, according to ISS VotingAnalytics. Proposals are pending at Ford Motor Co., LinkedIn Corp., Kinder Morgan Inc. and Waste Management Inc., ISS VotingAnalytics data show.
Earlier this month, Trillium Asset Management LLC, which manages more than $2 billion focused on sustainable and responsible investing, withdrew a workplace diversity proposal at Adobe Systems Inc. after the company published expanded employee data on its website. Trillium, which owns 266,177 shares, planned to vote in favor of the Apple diversity proposal, according to Brianna Murphy, a vice president at the fund.
Boston-based Trillium is also sponsoring a shareholder resolution focusing on the gender pay gap for the first time. It is seeking to force Citigroup Inc. to disclose the gap between the amounts the bank pays its male and female employees. Citigroup declined to comment.