SUPPORTING STATEMENT:Recently, the racial justice movement and the disproportionate impacts of the pandemic have focused investor attention on civil rights and gender and racial equity in the workplace. Further, workforce diversity is increasingly seen as a driver of long-term value creation. Accordingly, investors benefit from better understanding of DEI strategy and performance at portfolio companies.
Maximus touts its commitment to DEI, stating that it is “central to our company identity” and a “business imperative.” Maximus says that DEI “broadly outlines the comprehensive efforts we are taking to create a more inclusive workplace.”1 While we appreciate these assurances, investors are unable to evaluate Maximus’ performance in this area without additional workforce diversity disclosure.
Maximus is required to annually submit an EEO-1 Report — a comprehensive breakdown of its workforce by race and gender according to 10 employment categories — to the United States Equal Employment Opportunity Commission. The disclosure of this report would provide comprehensive and standardized workforce diversity data to investors with minimal additional burden on Maximus.
Such disclosure is increasingly becoming standard practice. According to an analysis by As You Sow, 90% of the S&P 100 have released or committed to release their EEO-1 reports and that 67% of the Russell 1000 firms disclose workforce diversity data in some form.2 Widespread disclosure of EEO-1 data is critical because the standardization provides consistency, allowing investors to compare progress across firms.
Research shows that more diverse workforces are linked to improved financial performance. According to a Wall Street Journal analysis of workforce diversity in S&P 500 companies, the 20 companies that ranked the highest outperformed the bottom 20 by an average operating margin of 12% compared to 8% over the same period. The top companies’ stocks also performed better with an average stock return of 10% versus 4.2% over the same 5 year period.3
Studies also show that diversity at multiple echelons of a company can have a big impact, highlighting investors’ need for the comprehensive, workplace, demographic disclosure requested in this proposal. A McKinsey study found that companies in the top quartile for ethnic and gender diversity in its executive ranks were 29% more likely to perform better than their peers in the quartile.4 A 2021 study found that high levels of racial diversity in both upper and lower management was associated with increased productivity.5
1 https://maximus.com/DEI
2 https://www.asyousow.org/our-work/social-justice/workplace-equity
3 https://www.wsj.com/articles/the-business-case-for-more-diversity-11572091200
4 https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/delivering-through-diversity
5 https://journals.aom.org/doi/abs/10.5465/amj.2019.0468