Apple Shareholder Proposal Seeks More Diverse Company Leadership

Tech workers and advocates have used many different tactics in their effort to get the industry to diversify. They crowdsourced diversity numbers to find out just how many black, Latino and women employees the tech companies had. They’ve published first-person accounts about being sexually harassed or marginalized in the workplace, which has pushed management to address the issue of culture.

A snapshot of Apple executives from Apple.com.
A snapshot of Apple executives from Apple.com. (Apple.com)

A small group of Apple investors is pushing another strategy: a shareholder proposal that requests the company diversify its senior management and board of directors. They’re taking their case to shareholders at a meeting next week despite the fact that Apple has asked voters to reject the proposal.

To launch a shareholder proposal, you need to own at least $2,000 of a company’s stock (or 1 percent of the company, depending on which costs less). Tony Maldonado owns at least that much stock in Apple. The investor wouldn’t tell me exactly how much, but for the second year in a row, he’s submitted this proposal:

“Shareholders request that board of directors adopt an accelerated recruitment policy requiring Apple Inc., the company, to increase the diversity of senior management and its board of directors.”

Maldonado says his proposal isn’t about social justice. It’s about business. He claims that the lack of diversity on the executive team and board puts Apple’s business at risk in the long run. Especially as Apple looks for its next big hit beyond the iPhone.

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“Their customers are a wide, diverse group globally. Set aside the social issue portion and look at it just from a business perspective,” Maldonado said. “It makes common sense.”

In other words, to make products that attract diverse global customers, Apple’s executive team needs to be more diverse and global, too.

Maldonado says he got the idea for the proposal when he was surfing company websites with his son. They went to the website of Apple, which Maldonado said is one of his favorite companies.

“And we were looking at their executive-level directory, and he just made a quick comment, ‘Hmmm, quite white’ ” Maldonado said. “That shocked me.”

Because Maldonado had never really noticed it before.

“And then I did more research, and I noticed in nearly 40 years, Apple has hardly promoted anyone of color to the C-suite,” Maldonado said. “Blacks, Latinos and Asians.”

Maldonado is willing to concede that the talent pool for engineering jobs might be shallow when it comes to blacks and Latinos. But he notes senior managers also oversee marketing, human resources, operations, legal and communications.

“Apple needs to be more honest with itself,” he said.

Apple didn’t return a request for comment. But in a filing with the Securities and Exchange Commission, the board advised shareholders to vote against the proposal. Apple says it has already embarked on a broad effort to address diversity.

Pat Miguel Tomaino, with Zevin Asset Management in Boston, agrees that Apple has tried to grow the pipeline for diverse talent. Zevin invests in socially responsible companies.

But Zevin signed on to the shareholder proposal this year because those diversity initiatives haven’t changed the composition of Apple’s upper ranks, Tomaino said.

If the proposal passes, it’s still up to Apple to decide on how to diversify. Tomaino has some suggestions.

“Basically, its peers have taken a lot of steps in that direction,” Tomaino said. "Microsoft announced last year that a portion of its CEO Satya Nadella's compensation would be tied to Microsoft’s own diversity performance targets."

Diversifying the tech sector is something Ellen Pao has thought a lot about. She’s the chief diversity and inclusion officer at Kapor Capital, which invests in and advocates for startups led by people of color. Her gender discrimination suit against a Silicon Valley venture capital firm resulted in a high-profile trial in 2015.

Apple’s diversity numbers aren’t that different from other established tech companies like Google and Facebook. Pao says one reason for the lack of diversity at those companies is because they started in an era when a premium was put on friends.

“The whole concept was starting with your friends in college or the friends you’ve known forever that you really trust, and going out and bringing more and more of your friends who look like you,” Pao said. “And that was successful. And for a set of companies it was extremely successful.”

Pao says these companies understand the need to diversify but they are reluctant to mess with the formula.

But Tony Maldonado, the investor who made the proposal, is playing the long game. While his proposal didn’t pass last year, it did get “yes” votes from 5 percent of the shareholders, which was enough to introduce the proposal again. This year, he’ll have to get at least 6 percent.

“I’m optimistically confident that I will get beyond the 6 percent threshold this year, so I’ll be able to bring this up next year,” Maldonado said.

Maldonado says that if he can keep his proposal alive, change will happen eventually.

This story is part of our ongoing series on Techquity: Diversity, Inclusion and Equity in Silicon Valley.