Apple investors urge the company to undergo a civil rights audit

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Apple shareholders approved a proposal urging the iPhone maker to undergo an independent audit to assess the treatment of female and minority employees

SAN RAMON, California – Apple shareholders approved a proposal urging the iPhone maker to undergo an independent audit to assess the treatment of female and minority employees, offering a rare reprimand to a management team who runs the most valuable company in the world.

The measure passed at Apple’s annual meeting on Friday is non-binding, so the Cupertino, California-based company isn’t required to adopt the recommendation.

But rejecting the wishes of its shareholders would put Apple in an awkward position, especially since the company has long considered itself a champion of civil rights. CEO Tim Cook reiterated this belief on Friday in response to a question from a shareholder at the remote meeting.

“I have long believed that inclusion and diversity are essential in their own right,” said Cook. “And that a diversity of people, experiences and ideas is the basis of any new innovation”.

Like other large tech companies, Apple’s workforce, particularly in high-paying technical positions, is made up mostly of white and Asian men – an imbalance the industry has been trying to address for many years.

Apple’s board of directors had pushed against the shareholder proposal to ask for a civil rights audit that would eventually be made public. The company highlighted its recent advances in civil rights inside and outside Apple that made third-party scrutiny of its practices superfluous.

Initiatives included Apple pledging $ 130 million to a fund for racial equity and justice after George Floyd’s murder in 2020 in Minneapolis. The company also says it is increasing the pay of minority women and employees, while also hiring more female workers, black and Hispanic.

At the meeting on Friday, Cook said Apple has achieved gender pay equity every year since 2017 and now has racial pay equity in the United States. He also said that 59% of Apple’s leadership positions in the past year have been filled by people from “underrepresented communities”.

But supporters of the civil rights proposal insisted Apple did not do enough, making it imperative for outsiders to investigate recurring reports of sexual harassment, discriminatory practices and other abuses within the company, which employs 154,000 people in all. the world.

The proposal gained momentum after Apple last year hired a former Facebook product manager, Antonio Garcia Martinez, to join its advertising team – a move that sparked protests among employees who accused him of making misogynistic comments and racists in a 2016 book called “Chaos Monkeys.” Apple quickly severed its ties with Garcia Martinez after the backlash.

Apple also raised widespread privacy concerns last year by announcing plans to scan iPhones for images of child sexual abuse. Complaints about that scanning program prompted Apple to backtrack on that plan, but it provided another collection point for supporters of a civil rights audit.

Most shareholder proposals are overwhelmingly rejected when opposed by the board of directors of public limited companies. This was the case with five other shareholder proposals at Apple’s meeting on Friday.

Apple shareholders have generally been enthusiastic supporters of the company due to the enormous wealth it has created. Apple is currently worth nearly $ 2.7 trillion, with most of the earnings coming from the past two years of a pandemic that has made its products and services even more popular.

Yet Apple’s proposal for a civil rights audit has garnered backing from two consulting firms that often influence institutional shareholder votes. The audit proposal was supported by 5.13 million shares and countered by 4.45 million shares, with 131.2 million shares abstaining, according to a filing from Apple’s Securities and Exchange Commission.

The result “shows that investors want to know whether Apple is making a difference in addressing the potential harm to key stakeholders from its products and policies,” said Dieter Waizenegger, executive director of SOC Investment Group, who was one of the shareholders who presented the proposal on civil rights. “Investors have listened to Apple’s corporate and retail workers who have boldly spoken out against unfair and harmful terms even under threat of retaliation.”

Similar shareholder proposals seeking civil rights audits have been adopted over the past year in several other public companies, including CitiGroup.

While he did not say whether Apple intends to undergo a civil rights audit, Cook described gender and racial equity as “essential to the future of our company.”

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