Delivering Inequality at the Top: FedEx Shareholders Support a Review of Systemic Racism in Company Culture
Boston, MA (October 12, 2021) – At the September 27 shareholder meeting of FedEx Corporation nearly 19% of shareholders voted in favor of a shareholder proposal by NorthStar Asset Management, Inc. related to an evaluation of systemic racism in FedEx’s corporate culture.
“FedEx likes to say that ‘diversity starts at the top’ but we don’t see it that way when we look at the data,” said Mari Schwartzer, NorthStar’s Director of Shareholder Activism and Engagement. “Our examination of the company’s EEO-1 reports showed that less than a quarter of U.S. employees in the top-tier job category are diverse, and the most recent 10-K report tells us that there’s not a single Black or Latinx person listed as an Executive Officer. For a company whose U.S. workforce is over 50% diverse, we see this as a serious contradiction.”
According to its 2020 ESG Report, FedEx claims that 38% of “management” are minorities, but NorthStar analysis of FedEx’s 2020 EEO-1 report demonstrated different insights into the issue. According to NorthStar’s review, only 22% of the top-tier U.S.-based managers are diverse and most of the diversity in managers appeared one level down in mid-level management (“First/Mid Officials & Mgrs”). FedEx recently started disclosing EEO-1 data, but NorthStar’s shareholder proposal (item number 7 on the proxy), “Assessing Inclusion in the Workplace,” encourages more than just disclosure.
NorthStar’s Head of Equity Research, Ivy Jack, elaborated: “We’re glad FedEx has a diverse workforce overall, but looking at the EEO-1 data made us wonder why they have thousands of diverse managers but a nearly all-white team of executive officers. Why aren’t the Black managers getting promoted to the highest ranks? What’s holding them back? We need FedEx to look into and disclose data like internal promotion, retention, and sponsorship rates, benefits usage, and opportunity data by race and job category. Many shareholders clearly agreed that the time has come to tackle this issue head-on.”
Diversity at the top has become a critical business issue in recent years. Numerous studies have indicated that better diversity at companies, especially in management, will lead to better profitability. Continuing several years of research, McKinsey & Co.’s 2020 “Diversity Wins” report found that companies with greater management diversity were more likely to have above-average profitability and that the greater the diversity representation, the higher the likelihood of outperformance.
Underscoring the issue, Schwartzer continued: “FedEx is headquartered in a diverse place and recruits diverse staff for the lower levels, but we believe that policies, practices, or social constructs at the company are limiting Black and Brown achievement. FedEx has the perfect opportunity —and the responsibility – to root out the causes of this stagnation and to improve its corporate culture.”
NorthStar Asset Management, Inc. is a wealth management company based in Boston with a focus on socially responsible investing. At NorthStar, creative shareholder engagement is a positive force for change.
Contact: NorthStar Asset Management, Inc.