Apple has asked the Securities and Exchange Commission for permission to exclude a new shareholder proposal on tying diversity figures for its executives to CEO performance as a way to improve diversity in the company.
In the latest tug-of-war between Apple and a few shareholders pushing for diversity reforms, Apple pushed back on the latest proposal months before its upcoming annual shareholders conference.
In an Oct. 9 letter, Apple Vice President of Corporate Law Gene Levoff wrote to the SEC seeking exclusion on the grounds that the same issue has been proposed twice before in the past five years and received less than 6 percent of the shareholder vote in its last election. Per SEC rules, any proposal that did not make the 6 percent mark can be left off the proxy materials for the next shareholder meeting.
The proposal, written by the Boston-based investment management firm Zevin Asset Management in September, asks Apple to consider “integrating sustainability metrics, including metrics regarding diversity among senior executives, into the performance measures of the CEO under the Company’s compensation incentive plans.”
In Apple’s 2016 diversity report, 67 percent of its leadership positions were white and a combined 10 percent were Hispanic and black. Only 28 percent were female.
For all its employees, the figures were slightly better: 56 percent of its employees were white and 21 percent combined were Hispanic and black. Thirty-two percent of employees were female.
But when focused on the top 107 executives in the Cupertino tech giant, the diversity figures skewed more to being more white and male-dominated. According to Apple’s 2016 Equal Employment Opportunity Act report, 73 of the 107 were white men and only five were Hispanic and black.
Zevin Asset Management and five other shareholders hoped to include the proposal in Apple’s proxy materials for the 2018 shareholders meeting.
Apple argues that the proposal is “substantially the same subject matter” that was proposed last year and in 2016. In both past proposals, London-based music executive Antonio Maldonado asked Apple to consider an “accelerated recruitment policy” to increase the diversity in senior management and the Board of Directors, especially with a focus on Hispanic, African American and Native American demographics.
The SEC is expected to decide before the shareholders meeting, which is expected to be in February.
In this year’s shareholders meeting, the accelerated recruitment policy proposal overwhelmingly lost, with 95.1 percent of shareholders voting against it.
“Apple basically duped the investors, to be quite honest,” said Maldonado to The Verge after the vote. “They conned ’em to say, ‘Look, we’re on top of it. Don’t worry about it. Everything’s fine.’”
In the latest proposal, Maldonado, Zevin and other sponsors cite studies that say companies with better diversity figures were more likely to perform better financially
“As long-term investors in the Company, I believe that greater clarity on Apple’s approach to its material diversity and inclusion challenges is needed,” wrote Seth Magaziner, General Treasurer of Rhode Island, who is also an Apple shareholder.
In May, Apple appointed its human resources chief, Denise Young Smith, to the newly created position of vice president for Inclusion and Diversity.
Earlier this month, Young Smith — who is the only black female executive at Apple — apologized for saying that “there can be 12 white, blue-eyed, blonde men in a room and they’re going to be diverse too” at a panel on fighting racial injustice.
Apple did not immediately respond to a request for comment.
Photo: Guests attend the grand opening of Apple’s Chicago flagship store along Michigan Avenue on Oct. 20, 2017 in Chicago, Illinois. The glass-sided store sits on shore of the Chicago River in the city’s downtown. (Scott Olson/Getty Images)
Tags: Apple, Denise Young Smith, diversity, SEC