TJX shareholders shoot down diversity measures
The TJX workforce is 77 percent female and 56 percent people of color, but its CEO, president, chief financial officer and four senior executive vice presidents are all white males.
As companies realize diversity is good for their bottom line, corporations are looking within themselves to identify disparities based on race, gender or ethnicity.
Companies like retailer Gap, Inc. have produced their own reports on policies and goals centered around erasing such compensation gaps in those groups. Now, the TJX Cos., Inc. in Framingham is talking about heading in that same direction.
A proposal calling for TJX to produce a report on policies and goals surrounding compensation gaps based on gender, race and ethnicity got more support than expected at a June 6 shareholders meeting, laying the groundwork for more discussion on the issue down the line.
Roughly 15 percent of TJX shareholders voted to approve the proposal, according to a U.S. Securities & Exchange Commission filing by the company. Pat Tomaino, associate director of socially responsible investing at Zevin Asset Management, the Boston investment firm behind the proposal, said he was hoping for support in the range of 5-6 percent, and his expectations were far exceeded. This reflects a significant level of concern surrounding the issue from shareholders, he said.
Making 72 cents on the dollar
The issue of pay disparities based on gender specifically has received a lot of attention in the technology sector over the past few years from investment companies, said Tomaino. However, this year Zevin decided to go out of its way to widen the discussion about pay disparities in consumer goods fields.
“Low wages and workforce composition issues make pay fairness a pressing risk and opportunity [in retail],” he said, adding Zevin decided to broaden the discussion to include ethnic and racial inequality.
“The typical female retail worker is paid just 72 percent of the wages paid to a comparable male. And compared to their white colleagues in the U.S. retail sector, black and Latino full-time salespersons earn just 75 cents on the dollar,” said Tomaino. “TJX Companies is not immune to these risks.”
Before the meeting, the board wrote it opposed the Zevin proposal on the grounds TJX has a fair compensation structure. The proposal wouldn't do anything to enhance the company's commitment to diversity and inclusion, according to the statement.
Factoring diversity into CEO pay
Also on the table at the shareholders meeting was a proposal from Boston portfolio manager NorthStar Asset Management, Inc. calling for diversity among senior executives to count as a CEO performance measure. In a proxy statement filed before the meeting, NorthStar said the diversity of TJX's leadership team is not reflective of its customer base, which is mostly female, or its workforce, which, according to TJX, is 77 percent female globally and 56 percent people of color in the U.S. Former CEO Carol Meyrowitz is now executive chairman of the company's board.
TJX's board countered ahead of the vote by saying its independent executive compensation committee is best suited to determine executive pay.
Mari Schwartzer, assistant director of shareholder activism, engagement, and social research at NorthStar, said TJX has received awards for diversity, including from the Human Rights Campaign, the largest LBGT civil rights advocacy group in the country. However, most of that diversity shows up in store employees and low-level management rather than in the senior management team, she said.
“TJX management states that the company has low attrition rates of employees and good training programs, but it is worrisome to us that those programs don't seem to lead to women and minorities in the management team,” Schwartzer said.
The NorthStar measure was defeated at the meeting, receiving just over 4 percent of the vote, but Schwartzer said her firm will still engage the company on the issue.
Good for the bottom line
According to McKinsey & Co., gender-diverse companies outperform others by 15 percent. That figure grows to 35 percent for ethnically diverse companies.
Claudia Lach, a Lexington-based corporate consultant whose clients include Boston College, Middlesex Community College and the Westford Public Schools, said companies have nothing to lose by looking into themselves, seeing what, if any, pay gaps exist, and trying to fix them.
“We are living in a society that requires all of us to be looking into this. If you pretend that things are fine, you may be losing out,” said Lach. “A lot of companies are adopting new policies and programs to be more inclusive, because they realize there is a financial gain if diversity and inclusion are well managed.”
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