Resolved clauseRESOLVED: Shareholders ask that the board commission and publish a report on (1) whether the Company engages in any practices associated with diversity, equity, and inclusion initiatives that may create risks of discriminating illegally on bases such as race and sex, thereby potentially triggering justice-seeking responses from stakeholders of the company (including employees, suppliers, contractors, and retained professionals), and (2) the potential costs of such discrimination to the business.
Whereas clauseWHEREAS: The US Supreme Court ruled in SFFA v. Harvard on June 29, 2023, that discriminating on the basis of race in college admissions violates the equal protection clause of the 14th Amendment.1
Attorneys General of 13 States warned Fortune 100 companies on July 13, 2023, that SFFA implicated corporate diversity, equity, and inclusion programs.2
Prior legal advice regarding the legality of racially discriminatory programs has been called into question post-SFFA.3
Recent analysis of American Fortune 100 hiring in the wake of the 2020 race riots found that whites were excluded from 94 percent of the hiring decisions,4 providing prima facie evidence of illegal discrimination by these companies.5
A review of PepsiCo’s website on Nov. 16, 2023, revealed that PepsiCo has apparently adopted gender and race hiring and promotion quotas, stating: “We aim to … increase our Black and Hispanic managerial populations, respectively, to 10% by 2025” and have “50% women in management roles by 2025.”6 In addition, PepsiCo is apparently committed to allocating resources on the basis of race, stating: “In 2020, we announced our Racial Equality Journey (REJ) Initiative, which is investing more than $570 million over five years to increase Black and Hispanic representation at PepsiCo and in our partnerships and supply chain,” including “$400 million to increase Black representation at PepsiCo, support Black businesses and empower Black communities” and “$172 million to empower Hispanic communities and businesses” (including “additional initiatives with $224 million for Hispanic suppliers”).7
Supporting statementSUPPORTING STATEMET: In just the past year, a corporation was successfully sued for a single case of discrimination against a white employee resulting in an award of more than $25 million.8 The risk of being sued for such discrimination appears only to be rising.9 With over 300,000 employees,10 PepsiCo likely has at least 225,000 employees who are potentially the victims of this type of illegal discrimination because they are white, Asian, male, or straight.11 Accordingly, even if only 10 percent of such employees were to file suit, and only 10 percent of those prove successful, the cost to the company could exceed $56 billion. And while more comprehensive racial equity audits can cost up to $4 million, this report should cost much less, as it need review only the potentially discriminatory programs.