Outcome: Successfully withdrawn as company agreed to implement new diversity, equality and inclusion initiatives that will result in a more diverse management team and publish expanded diversity and inclusion disclosures in its 2020 proxy statement and ESG report.
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, Tractor Supply Company’s executive officer team has no woman and an undeterminable number of people of color in leadership roles.
Compared to its peers, sixteen percent of non-CEO executives in the S&P1500 consumer discretionary sector are women. Nine percent of top executive roles in the Russell 3000 are held by women.
The business case for workforce diversity is compelling. McKinsey & Company found in 2015 and 2017 studies that highly diverse executive teams had higher returns on equity and earnings performance than those with low diversity. ISS Analytics examined companies where CEOs had a tenure of at least three years and found that those demonstrating gender diversity in the boardroom and the C-Suite showed, overall, the best results in terms of risk-adjusted quality of performance. (ISS Analytics /Governance Insights/October, 2018)
Companies across industry sectors are setting goals to address this significant issue. Intel has been tracking diversity data since 2014 and ties diversity goals to incentive compensation. In 2018, two years ahead of schedule, Intel achieved full representation of underrepresented minorities and women in its U.S. workforce. Symantec set a goal to increase the percentage of women in leadership (Director-level and above) to thirty percent by 2020. BP says it wants women in at least twenty-five percent of its group leadership roles by 2020. Citigroup, in August 2018, announced plans to reverse “falling diversity” by setting public quantitative goals and holding senior leaders accountable for meeting them.
Tractor Supply Company has made progress expanding board diversity. It is time, in our view, to extend focus and accountability to building diversity in its leadership ranks.
To address the lack of diversity in senior roles we believe the Board must set clear policies to attract, retain and promote women, including reporting on gender pay equity, formalizing sponsorship programs, and establishing gender-neutral family support programs.
Further, we believe that linking diversity performance metrics to senior executive performance reviews can sharpen management’s ability to manage human capital risks, increase accountability and successfully reach inclusion and diversity goals.
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 if and how it plans to make the company’s executive leadership team more diverse in terms of race, ethnicity, and gender.
Supporting Statement: A report adequate for investors to assess Tractor Supply Company’s strategy and performance could include disclosures such as use of “Rooney Rule” practices when interviewing for open positions, and hiring and promotion rates of women and people of color across employment.