How Three Activists Confront Companies on Diversity and Prevail

Arjuna, Pax, and Trillium seek data and action on gender pay gaps – and have gotten it from some tech giants. Next, they're zeroing in on financial firms.

When it came to protecting gay employees, J.B. Hunt Transport was one of the last holdouts.

The Arkansas-based trucking company hadn’t gotten any reports of discrimination based on sexual orientation or gender identity, officials told shareholder activist Brianna Murphy. And after her firm, Trillium Asset Management, filed a resolution asking Hunt to adopt policies explicitly protecting LGBT workers from bias, the company’s board recommended voting against the proposal. It was unnecessary, the company said.

At Hunt’s annual meeting in April, however, an unprecedented 54 percent of investors voted in favor of Murphy’s resolution. The company revised its policy this summer.

Although it manages only about $2 billion, Boston-based Trillium is one of a handful of activist investors that punch way above their weight when it comes to pushing diversity. These activists have prodded some of the largest public companies in the world to add women and minorities to their boards, to disclose data about the race and gender of their workforces, and to protect LGBTQ employees.

Trillium's Brianna Murphy

Trillium's Brianna Murphy


Arjuna Capital's Natasha Lamb

Arjuna Capital's Natasha Lamb

This year, these David-size firms zeroed in on some tech Goliaths to get them to close the gap between what men and women make. While only a small number of the diversity proposals go to a vote and even fewer pass, they put companies on notice that diversity matters. “This is not only a social justice issue, it’s a business issue,” says Natasha Lamb, director for equity research and shareholder engagement at Boston-based Arjuna Capital. “More diverse teams lead to better financial outcomes.” She says she targeted tech because of the “enormous gaps” between its numbers of men and women. Women make up only 25  percent of the tech workforce and hold just 11 percent of management positions, she says.

Lamb filed resolutions this year at nine tech companies, including Apple and Intel. Pax World Management, which is based in Portsmouth, N.H., and oversees about $4 billion, also filed an Apple proposal.

At Apple’s shareholders meeting in February, Chief Executive Officer Tim Cook said the company was paying women 99.6 percent of what it pays men in the U.S., and he added that it would take steps to address the remaining gap in its total compensation. In August, Apple announced it had closed it for U.S. employees. 

EBay announced today that its study found the gender pay gap effectively closed, with women employees in the U.S. earning 99.8 percent of the total compensation of men.  

Go to {ESG } to explore a selected company's environmental, social, and governance data.

Go to {ESG <GO>} to explore a selected company's environmental, social, and governance data.

In all, seven of the nine companies agreed to make their pay gap public and take steps to close it. “I’d say that this was a pretty successful campaign,” says Heidi Welsh, executive director of the Sustainable Investments Institute, a Washington nonprofit that tracks socially responsible investing. 

Small firms such as Arjuna, Pax, and Trillium wield so much clout because a growing number of investors care deeply about diversity. Filing a resolution doesn’t require a lot of assets. A shareholder needs to own only $2,000 of a company’s stock for a year to do so.

In most cases, activists withdraw a proposal if a company agrees to discuss the subject. That was the case with Apple. “We’d much prefer to have a dialog,” says Heather Smith, lead sustainability research analyst at Pax. According to data from ISS Governance, proposals asking companies to share and close their gender pay gap rose to 13 this year from just one in 2015 and none before that. Eight were withdrawn after companies agreed to talk with activists.

While pay proposals are relatively new, actions seeking more diversity on boards remained roughly steady at 30, reflecting the continued underrepresentation of women and minorities. Such proposals have an impact even if they don’t get majority support, according to research by Carol Marquardt, a professor of accountancy at Baruch College in New York, and Christine Wiedman at the University of Waterloo. They tracked proposals at 136 companies from 1997 to 2011 and found that targeted companies increased their female board representation from 3  percent to 8 percent on average in the two years following the proposal.
As they begin working on their agenda for the 2017 proxy season this fall, these crusaders for diversity say pay equity remains a main focus as it gains national attention. Massachusetts and California have passed legislation aimed at closing the gender pay gap. And President Obama in January proposed a rule that would require all companies to include salary data along with their annual filings with the Equal Employment Opportunity Commission (EEOC) about the race and gender of their workforces.

Arjuna’s Lamb says she’ll be looking at about eight companies in the coming year, including four of the big banks and two other financial services firms. Women in finance sometimes make up a majority of employees, but few hold top spots. Lamb has filed a resolution asking Starbucks to prepare a report on the company's policies and goals for reducing the gender pay gap and will also refile her proposals at Google and Facebook.

Trillium’s Murphy is also looking at financial companies and plans to file resolutions at nine of them to get more disclosure of data on race, gender, and pay. She says she's filing resolutions at Aflac and Fifth Third Bancorp asking the companies to issue reports on workforce diversity. In addition, a Trillium proposal asks Visa to disclose its EEOC data and give details of its programs designed to boost diversity. Visa spokeswoman Connie Kim says the company has received the proposal and is evaluating it.

Pax, too, is aiming to expand its pay equity campaign, and it’s petitioned the U.S. Securities and Exchange Commission to require all companies to disclose their pay data as material to performance.

“Pay equity is no longer aspirational,” Lamb says. “It’s being implemented.”
 Colby is a senior reporter at Bloomberg News in New York.

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