White Men Run One of America’s Most Diverse Companies
By many metrics, TJX Cos. looks like a beacon of diversity—more than three-quarters of employees are women, people of color make up more than half the workforce, and the retail company is considered a top employer for gay people and for people with disabilities.
Yet, with the shift of former Chief Executive Officer Carol Meyrowitz to executive chairman last year, all of the top executives at the parent company of TJ Maxx and other retail brands are white men. That’s not acceptable, says shareholder NorthStar Asset Management Inc., which is asking the board to make part of current CEO Ernie Herrman’s compensation contingent on diversifying his top corporate officers.
"TJX’s primary customer base is likely represented by the store workers and the store management, rather than what you see in the C-suite,” NorthStar CEO Julie Goodridge said in an interview. "As management gets further and further away from their customer base, that’s when they start making stupid decisions around merchandising, and that’s something we’re concerned about."
Like many investors that take up social issues with public companies, NorthStar is small by assets -- the all-female firm has just $300 million under management -- but it has successfully extracted some concessions. A handful of target companies, including CVS, IBM and Costco agreed this year to add language to value diversity at the board-of-directors level after discussions with NorthStar, Goodridge said.
TJX, which is also the parent company of Homegoods and Marshalls, recommended that investors vote against Northstar’s proposal, noting in its proxy filing that the four-member compensation committee includes two women. It also pointed out that the company has been listed as a best place to work for Hispanic workers, recent college graduates and Canadians and has hired more than 2,600 veterans, well on its way to a 2018 goal of 3,000, according to its 2016 corporate responsibility report. The company had no additional comment.
Now that most S&P 500 companies have at least two women on their boards of directors, activists have shifted their focus to top management. More than 95 percent of S&P 500 CEOs, 90 percent of top earners, and three-quarters of senior executives are men, according to Catalyst—even though more than 44 percent of employees among those companies are female.
TJX isn’t the only retailer under fire for diversity practices. CtW Investment Group is encouraging Urban Outfitters shareholders to vote against the reelection of two directors, saying the board’s “extreme insularity” has contributed to the company’s weak performance. CtW, a union-affiliated firm that often takes up corporate-governance issues, highlighted the homogeneity of the Urban Outfitters board, which includes two women, one of whom is married to the CEO. (She is also chief creative officer of one of the company’s brands.)
NorthStar, based in Boston, filed six proposals this year asking companies to seek greater board diversity. All six agreed, and the fund withdrew its proposals. But the fund was unable to reach an agreement with TJX, so shareholders will vote on the proposal at a June 6 annual meeting. The fund made the same proposal last year, which 5 percent of TJX shareholders supported.
"Race and gender are hugely related to retail, so it should be a no-brainer to really look for talent or promote people from the bottom up," Goodridge said. "They’ve essentially got low-paid labor that is diverse, with a bunch of white people on top."
Among the 27 similar proxy issues on management diversity in the past decade, none have passed or even garnered more than 10 percent of shareholder votes, according to ISS Corporate Solutions, a corporate governance consulting group and unit of Institutional Shareholder Services. Seven more are pending this year, including the TJX proposal, ISS said.