Shareholders pressure Apple to increase diversity among top leaders

Image: REUTERS/Stephen Lam
We may earn a commission from links on this page.

At Apple’s next shareholder meeting on Feb. 28, investors will vote on a proposal that, if passed, would force the company to create an “accelerated recruitment policy” with the aim of increasing diversity in its senior leadership and on its board of directors.

The proposal was submitted by Antonio Avian Maldonado, an individual investor, and Zevin Asset Management, a Boston-based investment firm with $600 million under management that has also submitted diversity-related proposals with TJX Companies and Colgate-Palmolive. Although the proposal doesn’t specify policies, its authors have suggested that Apple link executive pay to diversity goals (a step that Microsoft and Intel have already taken) and that the company’s board instate a policy ensuring diverse candidates are included in its pool of nominees.

Like many technology companies, Apple has a poor diversity record. Since publicly disclosing its diversity numbers for the first time in 2014, the company has made slow but steady improvement. But women and people of color are still severely underrepresented, especially among technical employees and leadership. Only 8% of Apple’s US tech workers identify as black, and 8% as Hispanic. Just 23% are women.

That still compares favorably to other large technology companies. At Google, for instance, only 1% of tech workers are black, 3% are Hispanic, and 19% are women.

Of Apple’s 107 top executives, 20 are women, three are black, and three are Hispanic. Five of the company’s eight board members are white men. The Apple shareholder proposal targets diversity specifically among these groups.

Its authors argue there’s a business case for stronger diversity initiatives, citing a McKinsey analysis that found ethnically and gender-diverse companies are more likely to perform well:

“Shareholders believe that companies with comprehensive diversity programs, and strong commitment to implementation, enhance their long-term value, reducing the Company’s potential legal and reputational risks associated with workplace discrimination and building a reputation as a fair employer. Equally, shareholders believe the varied perspectives of a diverse senior management and board of directors would provide a competitive advantage in terms of creativity, innovation, productivity and morale, while eliminating the limitations of ‘groupthink,’ as it would recognize the uniqueness of experience, strength, culture and thought contributed by each; strengthening its reputation and business.”

Apple has advised shareholders to vote against the new diversity policy, saying that the company already has programs in place to address this issue across all employees. It cited its partnership with the National Center for Women & Information Technology, its diversity website, and its $40 million partnership with the Thurgood Marshall College Fund, which creates opportunities for students from historically black colleges and universities who are pursuing careers in the tech industry.

Michael Connor, the executive director at Open Mic, a nonprofit that works with shareholders to engage companies around social issues, and which advised on the Apple shareholder proposal, argues that more could be done to increase diversity at Apple. “Every company in Silicon Valley ties the achievement of goals to executive compensation,” he says. “Why don’t they do that with diversity in the workforce, if they consider it important?”

Apple did not respond to a request for comment.

Social issues on company proxy statements, which can be filed by shareholders who own more than $2,000 in market value of a company’s stock, typically don’t garner high percentages of votes. Maldonado made a similar proposal at Apple’s 2016 shareholder meeting, but it only won 5% of the vote.

Still, the point is often to raise a particular issue. “If you’re flagging an emerging risk and something the company hasn’t caught on yet, the proposal might not win a majority right away, but we’re content to keep flagging this,” says Pat Tomaino, associate director of socially responsible investing at Zevin. “The objective with a lot of this is to get the company to engage with us in a productive dialog.”