S&P 500 company JB Hunt Transport Services is facing a vote at its upcoming AGM on a proposal regarding the healthcare it offers workers.
The proposal, filled by Trillium Asset Management, states: ‘To address LGBTQ+ inequality in society and employment, shareholders of [JB Hunt] ask the company to adopt and publicly disclose a policy (with details and timing at the discretion of the company) of equitable healthcare coverage for all employees, regardless of sexual orientation or gender identity.’
The resolution is likely to go to a vote after the SEC rejected JB Hunt’s request for no-action relief if it excluded the measure from its proxy materials.
In its supporting statement for the proposal, Trillium cites an American Trucking Association estimate that the industry lacked 78,000 drivers in 2022. ‘The trucking industry is diversifying and the LGBTQ+ community is one potential source of new drivers but there may be barriers,’ the firm writes.
It also cites a 2022 Human Rights Campaign index as finding that JB Hunt lags other employers in providing an inclusive workplace and does not offer equal healthcare coverage for transgender individuals or equivalency in same-sex and different-sex domestic partner benefits.
‘The company discusses ‘difficulty in attracting and retaining drivers and delivery personnel’ as a risk in its [Form 10K] and its ‘commitment to ‘supporting the health of its workforce, which includes access to high-quality benefits’ in its 2023 proxy. It is unclear in company reporting whether equitable healthcare coverage is offered,’ Trillium states.
It argues that, from a long-term shareholder value perspective, offering ‘inclusive benefits’ to underline their commitment to diversity and inclusion may make companies ‘more competitive employers that are better positioned to recruit and retain employees.’
JB Hunt’s objections to proposal
JB Hunt argued to the SEC that it should be able to omit the resolution on a variety of grounds, including that the company has ‘substantially implemented’ the proposal, that the proposal relates to the conduct of its ‘ordinary business operations’ and that it seeks to ‘micromanage’ the company’s daily business operations and decisions.
In addition, JB Hunt argued that the proposal includes ‘impermissible vague and indefinite language’ and that Trillium failed to prove its eligibility to submit the proposal. ‘[T]he company’s current equal opportunity policy demonstrates a commitment to equitable healthcare coverage for all employees, regardless of sexual orientation or gender identity,’ JB Hunt wrote.
‘The company’s Equal Employment Opportunity Policy…, which is publicly available on [its] website…, states that ‘JB Hunt will recruit, hire, compensate, offer benefits to, upgrade, train, lay off, terminate and/or promote individuals in all job titles and ensure all other personnel actions are administered without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, age, disability or protected veteran status, genetic information or any other basis protected by applicable law.’
It further wrote: ‘The company notes that its current employee healthcare insurance plan includes coverage of benefits for transgender individuals such as hormonal therapy, evaluation and management services provided by a physician and mental health counseling services.’
JB Hunt argued that its health benefit plans and ‘equitable’ health coverage relate to the company’s ordinary business operations: ‘As one of the largest surface transportation, delivery and logistics companies in North America, with about 35,000 employees, of which approximately 23,000 are truck drivers… the company’s decisions regarding the amount and type of healthcare benefits it provides to its diverse workforce require complex and extensive analysis that is best suited for management.’
The proposal also ‘seeks to suggest that the healthcare benefits offered by the company implicate a significant social policy issue that should be considered by [its] stockholders’ in addressing ‘LGBTQ+ inequality in society and employment,’ JB Hunt said. But the proposal is focused on the content of the company’s healthcare benefits for employees, the firm added, and therefore does not rise to the SEC’s standard of transcending its ordinary business.
The SEC disagreed with JB Hunt’s arguments. It wrote in response: ‘We do not believe the proposal, taken as a whole, is so vague or indefinite that it is rendered materially misleading… In our view, the proposal transcends ordinary business matters and does not seek to micromanage the company… In our view, the company has not substantially implemented the proposal.’ It also states that the documentation submitted by Trillium appears to comply with the relevant requirements.
A request for comment from the company was not returned immediately.
JB Hunt filed its 2023 proxy statement on March 16 and held its AGM on April 27.