Resolved clauseRESOLVED: shareholders request that within six months, Ingles publish a report that EITHER explains how and why the company affirmatively concluded it faces no material risks attributable to changing customer expectations on significant environmental and social policy matters OR, if it does not so conclude, discloses an analysis of how the Board is overseeing Ingles’ management of such risks (and any risks from failing to have disclosed the risks).
Supporting statementSUPPORTING STATEMENT: Dear fellow shareholders,
Incredibly, Ingles’ 10-Ks don’t declare any risks from changes in customer trends, tastes, preferences, or shopping patterns (collectively, customer “expectations”) regarding significant policy (or any other) matters – raising serious governance concerns about the Board’s role overseeing how Ingles determines such risks.
And indeed, customer expectations on significant policy issues can pose risks if not adequately addressed.
•
In its 2022 “Imperative Issues” report, FMI specifically recognizes “rising ESG expectations” as one of “six major issues” impacting retailers. (FMI is the industry’s trade association, and Robert P. Ingle II sits on its Board of Directors and its Public Affairs Committee.)
•
As Walmart recognizes, failing to “effectively respond to changing consumer tastes, preferences (including those related to ESG issues) and shopping patterns…could negatively affect our reputation and relationship with our customers, the demand for the products we sell or services we offer, our market share and the growth of our business.” (See many more examples at: TABholdings.org/Ingles)
•
Says Glass Lewis: “Insufficient oversight of material environmental and social issues can present direct legal, financial, regulatory and reputational risks that could serve to harm shareholder interests.”
•
In fact, even failing to disclose risks can create new risks, which the Board should certainly be closely scrutinizing and vigilantly avoiding.
Moreover, since 2006, Ingles’ 10-Ks have included a dedicated section about “trends” that may continue for the next year – but they don’t say that Ingles’ response (or failure to respond) to values-based expectations can pose risks. And concerningly, Ingles’ 10-K “trends” section only identifies a single such issue: the environment.
•
Every year since 2008, they’ve reported, using the exact same language, that: “The Company and its customers will continue to become more environmentally aware, evidenced by the Company’s increased recycled waste paper and pallets and customers’ increased usage of reusable shopping bags.”
•
Of course, if every year since 2008, Ingles and its customers have grown more aware, shareholders could expect Ingles’ language to evolve; yet it’s remained the same.
•
Similarly, Ingles has had a “Green Initiatives” webpage since 2011 but not one word has changed there either. (And yet in 2019, Ingles suddenly began inserting this old language into its annual proxy statements.)
•
As for expectations on other prevalent issues – like climate change, human rights, board diversity, or lobbying: Ingles offers little, if anything, in the way of concrete policies addressing them.
While it’s shocking that Ingles doesn’t attribute any risks to any changing customer expectations, we now seek details about how the Board oversees Ingles’ determination and management of those relating to significant policy issues.