Corporate boards rebuff conservative shareholder activism

The boards of several leading U.S. companies this week rejected efforts by conservative shareholder activists to separate them from “woke” politics.

Shareholders at AT&T, JP Morgan Chase & Co., Home Depot and Oreo cookies-maker Mondelez International all voted against conservative-led measures at their annual meetings this week on the recommendations of their boards of directors.

Conservative activists from the National Center for Public Policy Research, which purchases stock in U.S. companies through its Free Enterprise Project, presented proposals at AT&T on Thursday and JP Morgan Chase on Tuesday.

Their Item 7 in the AT&T proxy statement called for “an independent and unbiased third party” to conduct a nondiscrimination audit of the communications giant’s Senior Executive Diversity Council and identity-based Employee Groups, which conservatives say foster racism against white people.

“For example, while some of AT&T’s employee groups appear to focus on workplace characteristics such as ’administrative’ or ’emerging professionals,’ others are strictly based on surface characteristics such as race, sex or sexual orientation,” Sarah Rehberg, FEP program coordinator, told shareholders in prepared remarks.

Shareholders followed an AT&T board recommendation in the proxy statement to vote against this proposal.

“We believe that the proposal carries a divisive political tone and suggests that we incorporate views of specific special-interest groups into the requested report — neither of which we support or believe would be beneficial to creating a diverse and inclusive workforce,” the board recommendation states.

“Our philosophy of diversity, equality and inclusion, and the programs that emanate from that philosophy, encompasses all segments of society, including those who do not identify as racially diverse,” it adds.

Proposal 7 in the JP Morgan Chase proxy statement calls for changes in the board of directors’ selection process to include members of diverse viewpoints.

“We believe boards that incorporate diverse perspectives can think more critically and oversee corporate managers more effectively,” the NCPPR resolution states.

Shareholders voted against the proposal by an undisclosed margin, following the board’s declaration in its proxy statement that the financial giant already has “a robust director recruitment process.”

“The Board’s recruitment process has resulted in the election of three women directors in the past four years, one of whom is a person of color,” the JP Morgan Chase board writes.

Ethan Peck, an FEP associate who presented the proposal at the virtual meeting, said the bank’s stakeholder capitalism model “gives board members a heightened ability to pursue special interests and enrich themselves in the process.”

“JPMorgan wants to have its cake and eat it too,” Mr. Peck said in a statement after the meeting.

JPMorgan shareholders also rejected a request from the public interest law firm the American Civil Rights Project for managers to retract “up to 10 illegal, racially discriminatory policies adopted by JPMorgan Chase & Co.’s officers and directors” that favor people of color.

The law firm’s Dan Morenoff said the policies allow “countless rejected individual job applicants, loan applicants, and potential suppliers to sue for racial discrimination or to tee-up administrative complaints at state agencies.”

Also this week, the National Legal and Policy Center, which also purchases stock in companies, presented resolutions calling on Home Depot and Mondelez to require that each CEO be “an independent member of the board” to ensure transparency with shareholders about their political activities.

“For example, Home Depot will not, as its website claims, have electricity at all its facilities that will be generated 100% by renewables by 2030,” Paul Chesser, director of the NLPC’s Corporate Integrity Project, told shareholders on Thursday.

“It’s not possible. It defies energy physics and is scientifically and economically impossible,” he added.

Shareholders at Home Depot and Mondelez voted down the resolutions after their boards deemed them unnecessary.

The companies involved in this week’s shareholder activism did not respond to a request for comment.

Their resistance to the conservative efforts comes amid an ongoing debate about whether embracing liberal politics is good for business.

A Trafalgar Group poll released Monday found that 87.1% of likely U.S. voters from all political affiliations said they were either very or somewhat likely “to stop using a product or service of a company that openly advocates for a political agenda” that contradicts their beliefs.

But on Wednesday, the Walt Disney Co. announced an LGBTQ clothing and accessory line — including baby items, kids’ shirts, backpacks and bracelets — to capitalize on gay pride month in June.

Brian Matthews, senior vice president at the Kentucky-based Appriss Insights IT services firm, said it’s good business for companies to embrace progressive hiring policies.

“Employers that actively hire justice-involved individuals have access to a broader pool of talented applicants, which builds their bottom lines while also cultivating a more diverse and inclusive workforce,” Mr. Matthews said in an email.

Yet former Best Buy Co. CEO Brad Anderson, co-chair of the conservative Job Creators Network’s Boardroom Initiative, said too many CEOs now use “their publicly owned companies as political tools.”

“This is a problem that isn’t going to end until we can reign corporate boardrooms back in line and make sure they’re held to the fiduciary duty they were hired to uphold,” Mr. Anderson said.