Costco Shareholders Counseled to Vote for Shareholder Proposal Seeking Ideological Balance on Board of Directors. Free Enterprise Project Blasts Proxy Advisor Institutional Shareholder Services for Opposing Viewpoint Diversity
Free Enterprise Project Blasts Proxy Advisor Institutional Shareholder Services for Opposing Viewpoint Diversity
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Bellevue, WA/Washington, D.C. - Costco shareholders are urged to support a shareholder resolution submitted by the National Center for Public Policy Research's Free Enterprise Project (FEP) calling on the warehouse giant to expand its board's nominating and governance policies to consider viewpoint diversity when it seeks new board candidates.
Costco's annual meeting of shareholders is scheduled to take place tomorrow at 4PM local time in Bellevue, Washington. National Center General Counsel and FEP Director Justin Danhof, Esq., the author of the resolution, will present it for consideration at the meeting.
Viewpoint diversity explained
FEP's proposal notes that:
boards that incorporate diverse perspectives can think more critically and oversee corporate managers more effectively. By providing a meaningful disclosure about potential Board members, shareholders will be better able to judge how well-suited individual board nominees are for the Company and whether their listed skills, experience and attributes are appropriate in light of the Company's overall business strategy…
True diversity comes from diversity of thought. There is ample evidence that the many companies operate in ideological hegemony that eschews conservative people, thoughts, and values. This ideological echo chamber can result in groupthink that is the antithesis of diversity. This can be a major risk factor for shareholders.
FEP's entire proposal on viewpoint diversity, entitled "True Diversity Board Policy," as well as the opposition statement from Costco's board, are available on pages 25-27 on the company's proxy statement.
"Across America, company after company are adopting board diversity policies based on race and gender," said Danhof. "These policies have the stated goal of reducing corporate groupthink and require companies to interview an underrepresented minority and a woman for each open board spot. This isn't diversity. It's racism and sexism. Not all women think alike based on the fact that they are women. Similarly, not all Asian or Latino or black Americans think the same based on their respective skin color.
Costco and politics
"Costco likewise has a board nominating procedure that ensures a mix of different-looking people, but not necessarily folks who think differently. We think that for a board to avoid groupthink, it should, perhaps, be composed of individuals who think differently," continued Danhof. "And in our current era when large corporations are heavily involved in politics, and even changing culture outside of politics, we think that companies would be best served by boards that represent both sides of the political spectrum."
Intuitional Shareholder Services (ISS), the nation's largest proxy advisor, has recommended that shareholders vote against FEP's proposal.
"For years, ISS has urged its clients to approve any number of liberal shareholder proposals, including liberal board diversity resolutions that essentially call for affirmative action or a quota system. However, they are rejecting our call for viewpoint diversity. That's outrageous," said Danhof. "Fund managers and large investors should start looking elsewhere for advice on proxy ballots. ISS isn't looking out for their best interests. And investors should call their fund managers and demand they use another service besides ISS."
In the last two years, seven major corporations have adopted FEP's board diversity resolution as policy.
Tomorrow's Costco meeting will mark FEP's first participation in a shareholder meeting in 2020.
