Outcome: Withdrawn following a commitment from CVS to expand its workforce diversity reporting in its upcoming CSR report.
President and CEO Larry J. Merlo states: “In order to achieve and sustain breakthrough innovation, we must seek out, listen to and leverage the voices of our diverse customers, clients, colleagues and communities. To me, diversity and innovation go hand in hand.”
However, CVS does not disclose comprehensive workforce data, or disclose results of diversity initiatives. As a result, shareholders have insufficient information to determine if CVS has a diverse workforce or has been successful in expanding diversity into senior roles. Without this information we believe the company cannot persuasively demonstrate that it is capturing the potential business value associated with a highly diverse workforce.
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. Specifically, companies with greater ethnic diversity were 35 percent more likely to outperform. For every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent. Without detailed workforce diversity information investors cannot accurately evaluate the company’s commitment to diversity and progress over time.
Research from Mercer confirms that improving gender diversity will require greater attention to closing the gender pay gap. Owing to the widespread and general concern about gender and racial wage disparities the EEOC has proposed collecting pay data by gender, race and ethnicity in a dozen job categories.
Expanding workforce diversity also requires policies and programs that attract and retain diversity in the workplace. A company’s family leave policies, for example, can play a role. McKinsey & Company reports that paid parental leave and the availability of on-site child care can significantly impact women’s ability to rise to higher productivity roles and therefore perpetuate a gender wage gap. The best performing companies on gender diversity have implemented gender neutral policies that improve the workplace for both men and women, according to McKinsey. These policies are also important to same-sex and adoptive parents.
Diversity benchmarks can help ensure companies hiring hundreds of employees, such as CVS, create competitive workforces. Companies that are publicly accountable to diversity goals are most likely to make rapid progress toward achieving their goals.
RESOLVED: Shareholders request that CVS prepare an annual diversity report, at a reasonable cost and omitting confidential information, available to investors including:
1. A chart identifying employees according to gender and race in major EEOC-defined job categories, listing numbers or percentages in each category;
2. A description of policies/programs focused on increasing gender and racial diversity in the workplace.
Supporting Statement: A report adequate for investors to assess strategy and performance can include historical data, a review of appropriate time-bound benchmarks for judging current and future progress, and details of policies and practices designed to reduce unconscious bias in hiring, to build mentorship, training programs, work-life initiatives, and workforce stability.