Equal employment opportunity (EEO) is a fair employment practice and an investment issue. We believe that companies with a good EEO record have a competitive advantage in employee recruitment and retention. Moreover, U.S. customers are increasingly diverse. A representative work force is more likely to anticipate and respond effectively to evolving consumer demand.
Conversely, allegations of discrimination in the workplace have created a significant burden for shareholders due to the high cost of litigation and the potential loss of government contracts. Such litigation may also damage a company’s reputation.
Specifically, the cost to Home Depot shareholders for settling discrimination lawsuits has exceeded $100 million in the last 11 years. While Home Depot’s most significant EEO settlement of $87 million was in 1997, allegations of discrimination have persisted. In 2004, Home Depot agreed to pay $5.5 million to settle U.S. Equal Employment Opportunity Commission charges of class-wide gender, race and national origin discrimination at more than 30 Colorado stores. Most recently, in 2006, Home Depot paid $125,000 to settle a racial discrimination suit.
In U.S. corporations, women and minorities comprise 47% and 27% of the workforce, respectively, yet they represent less than 19% and 11% of executive-level positions. Representation in management is better, but still disproportionately low at 36% for women and 17% for minorities (Peopleclick Research Institute, 02/04, using U.S. Census Bureau’s Census 2000 Special Equal Employment Opportunity Tabulation).
We agree with a recommendation of the 1995 bipartisan Glass Ceiling Commission that “public disclosure of diversity data-specifically data on the most senior positions-is an effective incentive to develop and maintain innovative, effective programs to break the glass ceiling barriers.”
Many major U.S. corporations provide diversity reports with detailed EEO information, including some that have experienced large discrimination lawsuits, such as Wal-Mart, Texaco and Coca-Cola.
In 2001 Home Depot, in an agreement with a coalition of more than two dozen institutional investors, began providing EEO information to investors upon request. Since then, however, Home Depot has reversed its policy on disclosure of this information.
Home Depot shareholder votes in favor of a comprehensive diversity report surpassed 26%, 36% and 30% in 2007, 2006 and 2005, respectively – sending a strong signal to management that shareowners desire increased accountability on EEO.
Home Depot has demonstrated leadership on corporate social responsibility issues. We ask the company to expand its leadership by honoring its previous commitment to EEO disclosure.
The shareholders request that Home Depot prepare a diversity report, at reasonable cost and omitting confidential information, available to investors by September 2008, including the following:
1. A chart identifying employees according to their gender and race in each of the nine major EEOC-defined job categories for the last three years, listing numbers or percentages in each category;
2. A summary description of any affirmative action programs to improve performance, including job categories where women and minorities are underutilized; and
3. A description of any policies and programs oriented specifically toward increasing the number of managers who are qualified females or minorities.