TJX shareholders to vote on diversity, pay equity report

TJX shareholders will vote on diversity as a measure of CEO compensation at their annual meeting June 6.

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By Laura Finaldi

Shareholders of the TJX Cos. in Framingham will decide if diversity among senior executives will be considered as a CEO performance measure and whether or not to produce a pay equity report at their annual meeting on June 6 in Natick.

If the proposal gets passed, CEO Ernie Herrman would be partially evaluated on his ability to increase gender, racial and ethnic diversity among senior executives. The company’s board of directors is unanimously opposed to the proposal, which was introduced by shareholder NorthStar Asset Management, Inc. of Boston, according to a proxy statement.

For a company whose average customer is a 25- to 44-year-old woman and whose workforce is roughly 50 percent female and 33 percent minority, TJX’s leadership team lacks diversity. The senior management team is completely white and mostly male, and, following the 2016 exit of former CEO Carol Meyrowitz, executive offices became entirely filled with white men. Meyrowitz stayed on as the executive chairman of the company's board.

TJX shareholders are worried lack of diversity may be adversely affecting shareholder value, according to a shareholder report. Research from McKinsey & Co. shows gender-diverse companies outperform others by 15 percent. That figure grows to 35 percent for ethnically diverse companies.

Women are also less likely to be promoted to initial managerial positions, according to McKinsey, so they’re less likely to be hired into more senior positions. In 2015, 90 percent of new CEOs were promoted or hired from CEO pipeline roles, and all of those hires were men.

In a letter, the company said it is committed to diversity and inclusion, has been recognized for its efforts by several organizations, including the Human Rights Campaign. The board’s independent executive compensation committee is best-suited to evaluate changes to executive compensation, according to the board of directors.

“We continue to believe the ECC, which is advised by an independent compensation consultant, is in the best position to weigh these factors and evaluate changes to our compensation program,” the letter said.

Another shareholder, David Fenton, asked the company to prepare a report on its policies and goals that work towards reducing gaps in compensation based on gender, race, or ethnicity. Gap Inc. released a similar report in 2014, and other companies, like Gap Inc., Adobe, Amazon, eBay, and Microsoft have committed to doing the same.

Data from the Economic Policy Institute show average hourly wages for black men to be 78 percent of what white men make in similar situations, a figure that falls to 66 percent for black women. Compared to white women, black women make 88 percent of their hourly wages.

The board also opposes this proposal, saying TJX Cos. has a fair compensation structure and the proposal wouldn’t do anything to enhance the company’s commitment to promoting diversity and inclusion.

At the meeting, shareholders will also discuss executive compensation and policies surrounding it, and a proposal for a report on net-zero greenhouse gas emissions, among other things.