Resolution askStrengthen board oversight of issue
ESG sub-theme- Diversity, equity & inclusion (DEI)
Type of voteShareholder proposal
Company sectorIndustrials
Company HQ countryUnited States
Resolved clauseShareholders request that the Board of Directors create a board committee on corporate financial sustainability to oversee and review the impact of the Company’s policy positions, advocacy, partnerships and charitable giving on the Company’s financial sustainability. The Company should issue a public report on the committee’s findings by the end of 2025.
Whereas clauseThe Company’s policy positions, advocacy, partnerships and charitable giving should not create excessive risk of alienating consumers, decreasing sales, or diminishing shareholder value, without an affirmative determination – consistent with applicable fiduciary duties – that the expected financial benefits of such engagements outweigh their costs.
Beginning on or about July 9, 2024, the Company was the object of a grassroots campaign organized by citizen-journalist Robby Starbuck claiming1
the Company had “gone woke” as evidenced by, among other things: (1) “Funding a pride event for kids as young as 3,” (2) “LGBTQ & race based identity groups at corporate,” and (3) a “95/1002 [Corporate Equality Index] score from the [Human Rights Campaign],” which has been described as increasing the radicalization of businesses by strategically “moving the goalposts” required to obtain a good score.3 On July 16, 2024, the Company, apparently in response to the public’s backlash against its “woke” policies, committed to, among other things, eliminating (1) participation in “festivals,” and (2) identity-based employee groups.4 However, the Company failed, according to Starbuck, to address all the concerns raised by the campaign. Specifically, Starbuck noted that, among other things:
“Customers want to hear … they will no longer participate in social credit CEI scoring by HRC.”5 Elsewhere, Starbuck noted that:
“John Deere is now at a 1 year low in stock price” and that the “only company to thrive after my reporting is Tractor Supply who did a FULL rejection of woke policies….”
Supporting statement: The Company’s shareholders have reason to believe that the value-destroying initiatives identified above are a symptom of a deeper problem, and that more is needed than the commitments of July 16, 2024. For example, Jerry Bowyer, president of Bowyer Research, noted that even after the public backlash, the Company “said nothing about the fact that it
discriminates against religious employees in not having a faith-based employee resource group” and “is stonewalling” him rather than discussing ways to get back to neutral.7 Recent events make clear that company value drops when companies take overtly political and divisive positions that alienate consumers. Following Bud Light’s embrace of divisive gender ideology, its revenue fell $395 million in North America when compared to the same time a year ago.8 This amounts to roughly 10 percent of its revenue in the months following its leap into contentious politics.9 Target Corporation’s market cap fell over $15 billion amid backlash for similar actions.10 And Disney stock fell 44 percent in 2022 – its worst performance in nearly 50 years – amid its decision to put extreme partisan agendas ahead of parents’ rights.