THE HOME DEPOT, INC. | Achieving Gender and Racial Equity on the Board of Directors

Status
13.59% votes in favour
AGM date
Proposal number
8
Resolution details
Company ticker
HD
Lead filer
NorthStar Asset Management, Inc.
Resolution ask
Report on or disclose
ESG theme
  • Social
  • Governance
ESG sub-theme
  • Diversity, equity & inclusion (DEI)
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Discretionary
Company HQ country
United States
Resolved clause
RESOLVED: Shareholders request that the Board of Directors report to shareholders within six months after the Company’s annual meeting, at reasonable expense excluding confidential information, with action steps to foster greater racial and gender equity on the board.
Whereas clause
WHEREAS:

In the U.S., the lack of diversity on corporate boards of directors has become a significant concern for investors and companies. Though a focus on racial equity was fueled by country-wide racial justice protests in 2020, progress on boardroom diversity for both racial/ethnic and gender diversity remain slow;

The Proponent engaged The Home Depot (“the Company”) on board diversity concerns and the potential negative effect on long-term share value in 2015. We were pleased when that engagement resulted in an agreement with the Company to enhance its Policy on the Consideration and Evaluation of Board Candidates to encourage greater diversity. While this is an important step forward, the Company acknowledges that, 6 years later, only 25% of the board self-identifies as diverse by race or ethnicity and only 25% identify as gender diverse. To the Proponent’s knowledge, the Company has not set in place concrete plans to achieve greater board diversity;

These figures stand in contrast to the Company’s stated workforce diversity of almost 50% diverse and 38% female employees, or The Home Depot’s customer base which studies report is 45-50% women;

Research has shown that diverse teams are beneficial in many ways, including a higher likelihood to “radically innovate and anticipate shifts in consumer needs and consumption patterns—helping their companies to gain a competitive edge” and likeliness to outperform industry peers on profitability over time. Importantly, it has also been found that the level of diversity matters, with a 48% performance differential between most and least diverse companies ;

The Proponent believes that committing to concrete, actionable steps to further diversify the board of directors would serve the long-term value of shareholders and the company.
Supporting statement
SUPPORTING STATEMENT:

The Proponent suggests that among the strategies the Company could explore include, at board and management discretion, are: engaging a search firm for each board search, setting board diversity goals and timelines, requiring at least two candidates of color and two gender diverse candidates in each candidate pool, examining the potential limits to increases in diversity from using current board member networks for recruitment, and other strategies that balance candidate qualifications and diversity. In defining “racial equity” and “gender equity,” the Proponent suggests the Company use comparative statistics on either the general U.S. population diversity, company workforce diversity, or, particularly for racial diversity, other logical comparison such as the Company’s headquartering city, Atlanta, GA.

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
EFG Asset Management For Home Depot reports that its Governance and Nominating Committee evaluates and recommends candidates for membership on the board. The board states that the committee nominates and selects candidates based on, among other things, the candidate s experience, skills, background, gender, race, and other qualities and attributes. Furthermore, the company states it is committed to having a diverse board, has a board nominating process that includes diverse candidates in candidates searches, and has a board that reflects this.

However, further reporting on the company s steps to increase gender and racial board diversity could be of value to shareholders. A commitment to diversity at all levels of a company can assist companies in attracting employees, creating goodwill with consumers, and competing in an increasingly global marketplace, which in turn can benefit long-term shareholder value. Given its adoption would serve to promote the company's efforts to promote diversity and that the resolution does not appear to constrain the firm's ability to recruit competent and experienced executives and board members with suitable skill sets specific to the company's needs, this resolution warrants shareholder support.

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