STRUGGLES IN STORE
Retailers could be reporting the biggest collective drop in first-quarter profits since the recession,
SOUTHFIELD, MICH.— By many metrics, TJX Cos. looks like a beacon of diversity — more than three-quarters of employees are women, people of colour make up more than half the workforce and the retail company is considered a top employer for gay people and for people with disabilities.
But last year, former chief executive officer Carol Meyrowitz became the executive chairperson. The move meant that all the top executives left at the parent company of HomeSense, Winners, Marshalls and other retail brands were white men.
That’s not acceptable, says NorthStar Asset Management Inc., which is asking the board to make part of current CEO Ernie Herrman’s compensation contingent on diversifying his top corporate officers.
“TJX’s primary customer base is likely represented by the store workers and the store management, rather than what you see in the C-suite,” NorthStar CEO Julie Goodridge said in an interview. “As management gets further and further away from their customer base, that’s when they start making stupid decisions around merchandising, and that’s something we’re concerned about.”
TJX, which is also the parent company of TJ Maxx, recommended that investors vote against NorthStar’s proposal, noting in its proxy filing that the four-member compensation committee includes two women. It also pointed out that the company has been listed as a best place to work for Hispanic workers, recent college graduates and Canadians.
The filing indicated that the company has hired more than 2,600 veterans, well on its way to a 2018 goal of 3,000, according to its 2016 corporate responsibility report. The company had no additional comment. Now that most S&P 500 companies have at least two women on their boards of directors, activists have shifted their focus to top management. According to Catalyst, a research organization that promotes inclusive workplaces for women, more than 95 per cent of S&P 500 CEOs, 90 per cent of top earners, and three-quarters of senior executives are men — even though more than 44 per cent of employees among those companies are female.
TJX isn’t the only retailer under fire for diversity practices. CtW Investment Group is encouraging Urban Outfitters shareholders to vote against the reelection of two directors, saying the board’s “extreme insularity” has contributed to the company’s weak performance. CtW, a union-affiliated firm that often takes up corporate-governance issues, highlighted the homogeneity of the Urban Outfitters board, which includes two women, one of whom is married to the CEO. (She is also chief creative officer of one of the company’s brands.)
NorthStar, based in Boston, filed six proposals this year asking companies to seek greater board diversity. All six agreed, and the fund withdrew its proposals. But the fund was unable to reach an agreement with TJX, so shareholders will vote on the proposal at a June 6 annual meeting. The fund made the same proposal last year, which 5 per cent of TJX shareholders supported.
“Race and gender are hugely related to retail, so it should be a nobrainer to really look for talent or promote people from the bottom up,” Goodridge said. “They’ve essentially got low-paid labour that is diverse, with a bunch of white people on top.”
Among the 27 similar proxy issues on management diversity in the past decade, none have passed or even garnered more than 10 per cent of shareholder votes, according to ISS Corporate Solutions, a corporate governance consulting group and unit of Institutional Shareholder Services (ISS). Seven more are pending this year, including the TJX proposal, ISS said.