Outcome: Successfully withdrawn following a commitment from the company to conduct a review of employee benefits, compensation and wages.
RESOLVED: Panera Bread Company shareholders urge the Board to adopt principles for minimum wage reform, to be published by October 2016.
This proposal does not encompass payments used for lobbying or ask Panera to take a position on any particular piece of legislation.
We believe principles for minimum wage reform should recognize:
1. A sustainable economy must ensure a minimum standard of living necessary for the health and general well-being of workers and their families; and
2. The minimum wage should be indexed to maintain its ability to support a minimum standard of living; and to allow for orderly increases, predictability and business planning.
Until the early 1980s, an annual minimum-wage income – after adjusting for inflation – was above the poverty line for a family of two. Today, the federal minimum wage of $7.25 per hour, working 40 hours per week, 52 weeks per year, yields an annual income of $15,080, well below the federal poverty line for families.
Income inequality is recognized as an economy-wide problem. For example, an S&P research brief stated “increasing income inequality is dampening U.S. economic growth.” Peter Georgescu, chairman emeritus of Young & Rubicam, wrote in an op-ed Capitalists, Arise: We Need to Deal With Income Inequality “Business has the most to gain from a healthy America, and the most to lose by social unrest”.
There are examples of CEOs supporting strong wages and indexing:
• Costco CEO Jelinek wrote to Congress urging it to increase the minimum wage. “We know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty”.
• Morgan Stanley CEO Gorman and McDonald’s CEO Thompson have indicated support for minimum wages to be raised.
• Subway CEO DeLuca supports minimum wage indexing because it allows for business planning.
• Aetna CEO Bertolini, said paying less than $16 per hour is “unfair.”
• Wal-Mart CEO McMillon, said that he voted in favor of Arkansas’s ballot measure raising the state’s minimum wage.
According to polls, minimum wage reform is one of the most significant social policy issues.
More than 600 leading economists, including seven Nobel Prize winners, concluded that the U.S. should raise the minimum wage and index it. Studies indicate increases in the minimum wage have had little or no negative effect on employment of minimum-wage workers. Some research suggests a minimum-wage increase could have a small stimulative effect on the economy due in part to increased consumer purchases. A November 2015 Morgan Stanley report, Mind The Inequality Gap, suggests there may be financial risks for companies because economic inequality can stunt consumer demand.
While Panera’s CEO has articulated support for a minimum wage increase, Panera has not adopted a set of principles and it does not appear to have a position on indexing. Given media stories about the impact Panera 2.0 may have on its employment practices, Panera may face reputational risks.