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Feb 24, 2022

Pfizer faces shareholder proposal on DE&I disclosure

Company had sought to omit the proposal

Pfizer appears set to face a vote by shareholders on a proposal seeking disclosure around diversity, equity and inclusion (DE&I), a topic that has gained increased traction among investors in the last couple of years.

The biopharmaceutical company has unsuccessfully sought no-action relief from the SEC for omitting the proposal from its 2022 proxy statement.

As You Sow filed the proposal, which requests that Pfizer report to shareholders on ‘the effectiveness of the company’s [DE&I] efforts. The reporting should… address outcomes, using quantitative metrics for recruitment, retention and promotion of employees, including data by gender, race and ethnicity.’

In its supporting statement, As You Sow writes: ‘Quantitative data is sought so that investors can assess, understand and compare the effectiveness of companies’ [DE&I] programs and apply this analysis to investors’ portfolio management and securities’ selection process.’

The group cites studies including ones finding that companies with the strongest racial and ethnic diversity are 35 percent more likely to have financial returns above their industry medians, and that the 20 most diverse companies had an average annual five-year stock return 5.8 percent higher than the 20 least-diverse companies.

‘Pfizer has not shared recruitment, retention and promotion data by gender, race or ethnicity and its reporting is insufficient for investors to determine the effectiveness of its human capital management programs,’ As You Sow argues. ‘Between September 2020 and September 2021, the number of S&P 100 companies releasing recruitment rate data by gender, race and ethnicity increased by 234 percent, companies releasing retention rate data increased by 79 percent and companies releasing promotion rate data increased by 379 percent.’

It states that peer companies in the healthcare field are releasing more data on the effectiveness of their human capital management programs than Pfizer does: ‘Pfizer is increasingly a laggard in its decision to continue to withhold these datasets.’

SEC building, Washington, DC

Pfizer asked the SEC to provide the no-action relief on the grounds that, per Rule 14a-8(i)(10), the company has ‘substantially implemented’ the proposal. The company states that it already makes ‘extensive disclosure’ relating to its DE&I efforts, goals, metrics and trends, including quantitative data, in its:

  • Equal Employment Opportunity Employer Information Report disclosure
  • 2020 ESG report
  • Diverse perspectives and diversity and inclusion web page
  • Discussion of board oversight of culture and diversity and inclusion in the proxy materials for its 2021 AGM
  • Governance and sustainability committee charter.

For example, it says the ESG report includes a ‘pay equity’ section looking at the findings of a 2020 study covering 69,000 of Pfizer employees globally. Among other things, the company states that its 2021 proxy materials emphasize that ‘[t]he board recognizes the value of Pfizer’s colleagues and the need for the company to build and sustain a culture where colleagues of diverse backgrounds and abilities contribute their unique viewpoints and perspectives related to all aspects of the business.’

The SEC did not agree. In a filing, the agency states: ‘Based on the information you have presented, it appears that the company’s public disclosures do not substantially implement the proposal.’

Pfizer has not yet filed its 2022 proxy statement. Its 2021 AGM took place on April 22.

A company spokesperson says in a statement: ‘We take seriously all shareholder concerns and engage with our investors throughout the year, including all shareholder proponents who submit resolutions in advance of our annual meetings of shareholders.’

The As You Sow proposal comes amid a growing focus on DE&I issues at companies that is in part a result of the inequitable impact of the Covid-19 pandemic on communities of color and the 2020 protests against racial injustice.

Shareholder proposals in the area vary in approach. For example, shareholders in The Walt Disney Company will vote on a proposal at its March 19 AGM seeking a ‘report on both median and adjusted pay gaps across race and gender, including associated policy, reputational, competitive and operational risks, and risks related to recruiting and retaining diverse talent.’

Last year SOC Investment Group (then known as CtW Investment Group), working alongside the Service Employees International Union, filed proposals at eight major financial institutions requesting that they conduct – via an independent third party – racial equity audits. Although these did not garner majority support, they have had an impact.

Citigroup in October agreed to have a third party conduct a racial equity audit of the bank, six months after a proposal seeking such an audit received the backing of 38.6 percent of votes cast during the company’s AGM. Similar proposals are expected to be part of this year’s proxy season.


Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...