SOCIAL TOPICS (Archive): WORKPLACE

Published, July 1997

       With the preponderance of 1997 corporate shareholder meetings behind us, it is an appropriate time to review our successes and challenges in addressing the all too often hush-hush subjects of racism and sexism in the workplace. This year has witnessed a continuation of our long-term commitment to bring the collective voice of concerned shareholders to the boardrooms and executive suites of our portfolio companies.

       Well over 100 companies heard from us on our long-standing proxy voting policy to withhold support from director slates without women and minority representation. We are heartened that now we can support half of our companies, up from only about 30% just five years ago. This change reflects real progress both within our firms and in corporate America as a whole. Tempering any urge to celebrate, however, is the reality that women still comprise only about 10% of board seats and minorities much, much lower still; and that measurable headway amongst senior management continues to be elusive.

       A last minute withdrawal of our Texaco resolution was prompted by the firm’s pledge to substantially comply with the proposal seeking an updated equal employment opportunity (EEO) report. Nevertheless researcher Scott Klinger attended the annual meeting to address Texaco’s refusal to disclose specific information about pending discrimination liabilities. “How many more multi-million dollar settlements will need to hit the evening news and how many more shareholder suits will have to be filed before Texaco discloses to its shareholders the risks they face from past acts of discrimination?” asked Klinger. To this Texaco responded that they would only disclose “material” liabilities, later defined as 5% of earnings which in Texaco’s case implies a level over $80 million. Interestingly, information on environmental infractions resulting in penalties as small as $149,000 are readily disclosed.

       Two EEO resolutions sponsored by United States Trust Company did appear on company ballots this season. A proposal asking Southwest Airlines to prepare a report outlining the racial and gender composition of its workforce, along with a description of the company’s EEO policies and programs, was supported by 12% of shareholders. Co-filed with Christian Brothers Investment Services, the second resolution requesting that insurance provider American International Group take additional steps to further diversify its board received 10% of the vote. Though both of these firms have women directors, neither has minority representation. Furthermore both companies have thus far refused to disclose comprehensive EEO information.

       Recognized for leadership in the areas of environmental stewardship and community involvement, with particularly innovative programs focusing on at-risk youth and affordable housing, Home Depot has often been praised by social investors. The giant home improvement retailer, however, is increasingly involved in lawsuits alleging discrimination against women in job assignment, promotion and compensation. A California-based class-action suit goes to trial in September; the first case of its kind to be tried by jury. A separate suit seeking class-action status was recently joined by the Equal Employment Opportunity Commission, giving considerable clout to the plaintiffs’ case.

       We joined representatives from the Interfaith Center on Corporate Responsibility (ICCR) to meet with Home Depot management (director/executive vice president, attorney, employee relations director and corporate secretary), who adamantly believe they are unfairly charged. Though the company presented some interesting points, we were struck by the anecdotal nature of their information and were concerned about the adequacy of their monitoring and evaluation. For instance, each director is required to make ten unannounced visits to Home Depot stores each quarter to talk with a sampling of employees. The company, however, has no systematic method to collect, analyze and act upon information gathered in these visits. We are joining with ICCR in pressing Home Depot to release meaningful data to dispute the discrimination claims and are optimistic that more information will be forthcoming.