Apple CEO Tim Cook / REUTERS

Apple's Leaders 'Presently Fail' to Represent Diversity: Shareholders

Apple’s shareholders this month will vote to try and increase diversity within management, a proposal being pushed by its major investors. Despite conclusive data showing that diversity in management is critical for a company’s performance, Apple’s management says the proposed policy is “not necessary.”

The annual shareholders meeting on Feb. 28 is slated to feature a number of proposals, including Proposal No. 6, which calls for “an accelerated recruitment policy” for senior management roles and its board of directors both of which, according to shareholders, “presently fail to adequately represent diversity and inclusion.”

Apple has opposed Proposal No. 6 and is encouraging shareholders to vote against it.

On Tuesday shareholders Zevin Asset Management and Antonio Avian Maldonado II released a more detailed explanation of the reasoning behind the proposal, calling diversity at higher levels “critically important.”

“While Apple has increased overall diversity initiatives, most of these efforts involve junior staff working in the Company’s retail operations,” the shareholders state. “Changes in the makeup of senior management and board clearly lag those in the broader workforce.”

Apple does not participate in the DiversityInc Top 50 Companies for Diversity competition. The company said it does not want to implement the policy because it wants to focus on increasing diversity all across the company, not just in senior management.

“We believe that the proposal is unduly burdensome and not necessary because Apple has demonstrated to shareholders its commitment to inclusion and diversity, which are core values for our company,” Apple said in response.

While diversity across all levels of a company’s workforce is critical, data conclusively show that companies with diversity within its management ranks are the ones that demonstrate higher performance.

For example, among companies in the DiversityInc Top 10, women make up 39.2 percent of senior management, and Blacks, Latinos and Asians make up 18.3 percent. The DiversityInc Top 50 expressed as a stock index outperforms the S&P 500 and the Dow Jones Industrial Average over the long term, data shows.

Meanwhile, a comprehensive global study that researched nearly 22,000 companies in 91 countries, conducted by EY (No. 3 on the DiversityInc 2016 Top 50 Companies for Diversity) and The Peterson Institute for International Economics found last year that companies with women in management were more profitable than companies with fewer women in these positions.

The study, “Is Gender Diversity Profitable Evidence From a Global Study,” concluded that a company with even just 30 percent female leaders can earn an additional 6 percentage points of profit.

According to “Decoding Diversity: The Financial and Economic Returns to Diversity in Tech,” a report by Intel and Dalberg, diversity in the tech industry would be immensely profitable.

“Improving ethnic and gender diversity in the U.S. technology workforce represents a massive economic opportunity, one that could create $470 $570Bn in new value for the tech industry, and could add 1.2 1.6% to national GDP,” the report states.

Apple’s diversity page shows an upward trend in its hiring of women and minorities over the past three years. However, these new hires do not fill leadership roles. Apple’s global leaders have remained 72 percent male and 28 percent female since 2014. In 2014 63 percent of global leaders were white; in 2016 this went up to 67 percent.

Apple’s 2016 EEO-1 report reveals that of its 107 most senior leaders, only 18.7 percent are female. Whites (both male and female) make up 82.2 percent of the company’s top leadership. The team is 13.1 percent Asian, 2.8 percent Black, 1.9 percent Hispanic and 0 percent Native Hawaiian/Pacific Islander and American Indian/Alaska Native. There is no one who identifies as two or more races.

Despite technology companies’ public perception of being forward-thinking, progressive companies, they continue to trail behind, and while gains have been made they are small all around. In addition to Apple, Facebook’s senior leadership remains nearly three-quarters white, going from 73 percent in 2015 to 71 percent in 2016. Seventy-three percent of global leaders were male in 2016, compared to 77 percent in 2015.

For Google, senior leaders were 22 percent female in 2015. In 2016 women represented 24 percent of senior leaders.

Twitter has the same problem as its fellow tech companies and garnered backlash in November 2015 following a series of layoffs that people believed disproportionately targeted minorities, who were already underrepresented in the company to begin with.

Facebook, Google and Twitter do not participate in the DiversityInc Top 50 Companies for Diversity competition.

Apple is not alone where the push for diversity is coming from shareholders rather than within the company’s management, a study by PwC (No. 5) found.

The survey, called“The swinging pendulum: Board governance in the age of shareholder empowerment,”questioned more than 800 corporate directors of public companies. Seventy-one percent serve on the boards of companies with more than $1 billion in annual revenue.

“What we found in our survey was that directors were making a lot of changes in response to investors,”Paula Loop, who leads the PwC Governance Insights Center, told DiversityInc.

Loop said increasing board diversity is on the agendas of many institutional investors. According to the report, “In some ways, the pendulum has swung from a ‘board-centric’ model that took root after the governance and accounting scandals of the 1990s to an ‘investor-centric’ model today.”

Also, according to the study, men and women value diversity on boards differently. Female directors are much more likely to think board diversity improves company performance 89 percent compared to 24 percent of men.

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