Skip to main content
Aug 25, 2021

Nike shareholders to vote on social proposals

Diversity, political spending, pay equity and human rights on AGM agenda

Nike shareholders will vote on a proposal requesting disclosure around the company’s work to promote diversity and inclusion – and proposals on other social-related themes – as such measures have gained momentum this year.

The SEC earlier this month denied Nike’s request for no-action relief if it excluded a proposal filed on behalf of As You Sow. Specifically, the measure requests that Nike publish annual reporting assessing the company’s diversity and inclusion efforts, and that the reporting include at a minimum:

  • The board process for assessing the effectiveness of its diversity, equity and inclusion (DE&I) programs
  • The board’s assessment of program effectiveness as shown in any goals, metrics and trends related to the promotion, recruitment and retention of protected classes of employees.

In a supporting statement, As You Sow writes that investors are looking for ‘quantitative, comparable data to understand the effectiveness of [DE&I] programs within and between companies.’ It points to studies showing that, for example, companies with the greatest racial and ethnic diversity are 35 percent more likely to have financial returns above industry medians.

‘Nike provides insufficient quantitative data for investors to determine the effectiveness of its human capital management program as it relates to workplace diversity,’ As You Sow writes. ‘Unlike 71 percent of S&P 100 companies, Nike does not release its EEO1 form, the best practice for sharing workforce composition. Nor does the company release meaningful data related to the hiring, retention or promotion of its diverse employees.’

The company argued in its request for no-action relief that Rule 14a(i)(10) allows the company to exclude the proposal because its existing public disclosures already discuss its process for assessing its DE&I program and the company’s goals, metrics and trends related to its workforce diversity. The SEC did not agree.

The board in the company’s proxy statement urges shareholders to vote against the measure by arguing in part that:

  • ‘We are committed to advancing [DE&I] at Nike, including enhancing the representation of diverse individuals at all levels of the company’
  • ‘We continue to increase resources devoted to building a more diverse and inclusive workforce by scaling up our efforts to recruit, develop and retain diverse talent’
  • ‘Our current initiatives and public disclosures… already address the essential objective of the proposal and provide our shareholders with detailed information about Nike’s commitment to increasing [DE&I] at all levels of the company.’

GROWING SUPPORT FOR E&S
According to early proxy season analysis from Georgeson covering AGMs between July 1, 2020 and June 2, 2021, investor support for environmental and social shareholder proposals at Russell 3000 companies has increased significantly this year.

Proposals related to diversity generally cover asking for racial equity audits, disclosure of EEO1 data and reporting on DE&I efforts. Although no racial equity audit proposals received majority support up to early June, half of those voted on received support in excess of 30 percent, which is significant for a first-time proposal. Two proposals asking for EEO1 data and four asking for reporting on DE&I efforts passed.

Nike’s 2021 AGM takes place on October 6. A request for comment from the company was not returned immediately.

Nike shareholders will also vote on other social-related proposals. One requests that the company provide a report, updated semi-annually, disclosing its policies and procedures for making contributions and expenditures, direct or indirect, with corporate funds or assets: (i) to participate or intervene in campaigns on behalf of or opposing any candidate for public office; or (ii) to influence the general public regarding an election or referendum. This report would not include spending on lobbying.

‘Especially since the [January 6, 2021] insurrectionist attack on our nation’s Capitol, transparency and accountability for political speech and actions are paramount,’ the proponents write. ‘Nike recognized this when it announced that its [political action committee] will not support any member of Congress who voted to decertify the Electoral College results.’

The board urges shareholders to vote against this proposal, arguing in the proxy statement that it recently approved updates to the company’s policy on corporate political contributions, industry associations, public policy statements and lobbying, which will become effective and be posted on the company’s website in January 2022.

It adds: ‘In the board’s judgment, more disclosure beyond the enhanced disclosures that we will provide under our updated policy would not be in the best interests of shareholders.’

Another proposal asks Nike to publish a report examining the actual and potential human rights impacts of its cotton-sourcing practices throughout the supply chain.

The board opposes this measure, arguing that Nike is committed to the responsible and sustainable sourcing of the materials used in its products. ‘Our current initiatives… already address the underlying rationale for the proposal and provide our shareholders with more relevant information about Nike’s commitment to human rights and responsible sourcing than the requested measure,’ it adds.

A final social proposal requests that Nike report on ‘median pay gaps across race and gender, including associated policy, reputational, competitive and operational risks, and risks related to recruiting and retaining diverse talent.’

The board again opposes the measure, arguing that it is ‘committed to the principle of equal pay for equal work and to enhancing the representation of diverse individuals at all levels of the company.’ It adds that ‘our current initiatives and public disclosures, including the pay equity data published in our annual impact report, already address the underlying rationale for the proposal and provide our shareholders with more relevant information about Nike’s commitment to pay equity and increasing [DE&I] at all levels of the company than the requested measure.’

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...