Outcome: Successfully withdrawn following a commitment from Carter’s to strengthen its public disclosures related to workforce diversity and inclusion before the end of 2019.
We believe that diversity, inclusive of gender and race, are critical attributes of a well-functioning executive team and necessary to meaningfully drive diversity throughout an organization.
Currently, Carter’s has limited racial/ethnic diversity on the executive team.
Despite the strong business case for cultivating a diverse workforce, white males continue to dominate executive roles at Fortune 500 companies. Carter’s does not disclose comprehensive workforce data, or disclose results of diversity initiatives. As a result, shareholders have insufficient information to determine if Carter’s has been successful in expanding diversity into senior roles over time. The lack of racial/ethnic diversity at the executive level may suggest slow progress in building racial and ethnic diversity within other ranks at the company. Without comprehensive quantitative information we believe the company cannot persuasively demonstrate whether its diversity initiatives are successfully advancing people of color into varying ranks within the company. Therefore, investors cannot accurately determine if the company is capturing the potential business value associated with a highly diverse workforce.
A growing body of research indicates a positive relationship between firm value and the percentage of women and minorities in senior leadership roles. Diversity of gender, but also of race and ethnicity are critical to a well-composed leadership team. A McKinsey & Company report found that companies in the top quartile for gender or racial ethnicity are more likely to financially outperform national industry medians. Companies with greater ethnic diversity were 35 percent more likely to outperform. For every 10 percent increase in racial and ethnic diversity on the executive team, earnings before interest and taxes rise 0.8 percent . Without a truly diverse executive team we are concerned Carter’s may be leaving money and value on the table.
Industry peers like Gap and TJX Companies disclose workforce diversity policies, initiatives and metrics. Efforts of a diversity and inclusion strategy may include employee resource groups, mentoring, inclusion policies and practices, key performance indicators, and education outreach. We are concerned Carter’s is lagging behind industry peers who disclose and utilize workforce diversity plans to strategically advance diversity within their companies.
Companies that are publicly accountable to diversity goals are most likely to make rapid progress toward achieving their goals. We believe now is the time to set goals, report progress and hold executives accountable to expanding diversity beyond current levels.
RESOLVED: Shareholders request that the Board of Directors prepare a report (at a reasonable cost, in a reasonable time, and omitting confidential information) providing its assessment of the current state of its executive leadership team diversity and its plan to make the company’s executive leadership team more diverse in terms of race, ethnicity, and gender.