Costco will not join the reaction of the Dei. Why the shareholders rejected the anti-award proposal.

Costco shareholders rejected an investor proposal from a conservative reflection group that urged management to investigate the commercial risks linked to its diversity initiatives.

More than 98 % of the shares voted against the proposal, according to the preliminary results announced by the president of Costco, Hamilton “Tony” James. He and other members of the board of directors had asked shareholders to reject the proposal concerning the policies of diversity, equity and inclusion of the company before the annual assembly on Thursday.

“We owe our success to the more than 300,000 employees who serve our members every day. It is important that they all feel inclusive and appreciated and that they transmit these values ​​to our customers, ”said James.

Ethan Peck of the National Center for Public Policy Research – The right -wing shareholders’ defense group that submitted the proposal – supported in a pre -recorded message that the DEI is “illegal, immoral and prejudicial to the shareholder value” and presents risks of dispute for the company.

“By not hiring and not promoting completely independently of race and sex – in other words, by the merit alone – the company does not hire or does not always promote the best person for the position, And everything else comes back to sell the future success of the company.

The vote took place only a few days after President Trump used the executive power to suppress the dei.

Increasingly, companies are confronted with a confrontation with the DEI in shareholders’ ballot boxes.

Apple recently recommended investors to vote against a shareholder proposal aimed at eliminating the company’s Dei programs.

Right -wing groups such as the National Center for Public Policy Research and the National Legal and Policy Center claim that they present shareholder proposals to counter the liberal policy that invades business boards of directors and advances an ideological program ” awake ”which endangers in danger.

Based on the decision of the 2023 Supreme Court canceling positive action in admissions to the university to contest the policies of business diversity, these groups present more proposals related to the dei to investors.

Although low, the number of anti-dei shareholders’ proposals has more than tripled since 2020, according to the Conference Board. This season of proxies, Walmart and Starbucks face similar proposals.

Peck, deputy director of the free business project of the National Center for Research on Public Policy, said that his group provided 40 shareholder proposals this year, including 12 focused on Dei.

“Our efforts to propose as shareholders go entirely in tandem with the general reluctance against Dei, insofar as general reluctance and our proposals aim to reveal to what extent the Dei is discriminatory and destructive value” -It declared to USA Today.

Right’s investors advance shareholders’ proposals – even those likely to obtain support for a figure – to assert their point of view and draw attention. As with Costco, boards of directors generally recommend that shareholders vote against. Measures generally obtain less than 2 % of shareholders’ support.

Addressing business leaders on Thursday at the Davos World Economic Forum, Trump qualified the “absolute nonsense” programs.

His latest decree aimed at ending the DEI within the federal government and positive discrimination in federal contracts caused a shock wave in American companies. Trump said his administration would investigate companies that do not comply with the rules. This warning could further supply shareholder activism to the potential legal and financial benefits of initiatives in favor of diversity.

JP Morgan Chase is one of the companies that could become a target.

Asked about a potential challenge for his DEI practices, CEO Jamie Dimon told Squawk Box of CNBC: “Bring them”, although he said he would listen to the arguments on the errors of JP Morgan Chase “and would bring changes ”.

Faced with a rapidly evolving political environment and under the fire of conservative foundations, reflection groups and political actors, an increasing number of large companies have reduced their efforts in terms of diversity.

Some companies have withdrawn from the commitments of the DEI shortly before the entry according to Trump. Among them was Meta, owner of Facebook and Instagram, while CEO Mark Zuckerberg sought to align his social media company on the Trump administration.

These setbacks arouse criticism, saying that companies make short -seen decisions that could affect their activities.

Among them is the progressive group for the defense of shareholders AS You Sow, which published a 2023 report showing a “statistically significant correlation” between diversified management and eight key financial indicators.

“These have been around for over four years. We expect them to exist beyond this four-year window ahead of us, ”said Meredith Benton, the main founder of Whistle Stop Capital, who consults As You Sow on Dei. “What we want is that they make decisions that are in their long -term commercial interest. »»

Some companies maintain their Dei programs. None defended these programs with as much vigor as Costco.

The National Center for Research on Public Policy has submitted the shareholder’s proposal, arguing that Costco’s initiatives have “risks of dispute, reputation and financial for the company, and therefore financial risks for shareholders”.

The Costco Board of Directors voted unanimously to recommend shareholders to reject the measure, arguing that the diversity of employees and suppliers feeds innovation in the goods it stores and the services it offers.

“Our commitment to an anchored company in respect and inclusion is appropriate and necessary,” said the administrators. “The report requested by this proposal would not provide significant additional information.”

Costco CEO Ron Vachris also defended these practices with a worried shareholder, saying that his business does not use hiring quotas but strives to offer all workers the same opportunities.

“If these are policies that you consider to be offensive, I must tell you that I am not ready to change,” wrote Vachris in the exchange consulted by the Wall Street Journal.

Stefan Padfield, director of the free business project of the National Center for Research on Public Policy, said that Costco’s “provocative” response to a “perfectly reasonable demand for shareholders” was out of words.

“It is not enough to simply ask shareholders to trust the status quo at Costco,” Padfield told USA Today. “This is a rapidly evolving landscape in terms of legislation, regulation and market feelings, and shareholders have good reasons to request a review of practices, legal advice as well as collection and processing management information. “

This article was initially published on USA Today: Costco shareholders reject the anti-dei proposal. Here’s why they did.