In a recent federal filing before the U.S. Securities and Exchange Commission, lawyers for Apple (AAPL) maintained that the tech giant should not have to consider increasing its leadership’s ideological diversity and that arguments made in support of greater viewpoint variance were “without merit.”
The SEC disagreed, sending Apple’s legal team a stunning rebuke.
Because of that decision, at next month’s annual meeting of Apple investors, its shareholders will have the chance to vote on whether the Silicon Valley-based company should seek to increase ideological diversity or continue operating in a progressive prepotency.
The dispute arose from a shareholder proposal that I submitted to Apple in my capacity as the director of the National Center for Public Policy Research’s Free Enterprise Project (FEP), the nation’s leading conservative shareholder activist organization. Our proposal merely requests that Apple include the concept of ideological diversity in its calculus when it nominates new members to its board of directors.
Apple then filed what’s known as a no-action letter to the SEC, seeking permission to exclude our proposal from its proxy statement and proffering three distinct reasons for its request. The SEC rejected all three.
The goal of the FEP proposal is to help Apple’s leadership avoid groupthink.
Groupthink is a major threat to long-term investors in any corporation. And in an era when companies are increasingly taking strong political stances, the risk of ideological hegemony in corporate leadership is a growing concern. Nowhere is this more of an issue than in Silicon Valley. As Facebook CEO Mark Zuckerberg acknowledged in congressional testimony, Silicon Valley is an “extremely left-leaning place.”
Apple is no exception.
Apple CEO Tim Cook has been as much a social justice crusader as he’s been a businessman since assuming the helm in 2011. Cook has supported massive government regulation of carbon emissions, opposed religious liberty efforts and protested President Donald Trump’s immigration policies.
Specifically, in his opposition to state-level religious freedom efforts, Cook made it clear that he wasn’t speaking as a private citizen, but rather he spoke “on behalf of Apple.”
That’s a precarious statement, as it sends a message to all of Apple’s employees that the iPhone maker expects conformity to liberal policy positions. After all, Cook has already spoken for you. His statement contradicts the liberal sensibilities of free speech he purports to uphold, and this orthodoxy can be disastrous for business. If staff can’t question Cook on politics or public policy, under what circumstances can they question the boss?
Cook famously came out as gay in 2014, becoming the highest-profile American corporate executive to do so. But one has to wonder if right-wingers working at Apple would feel as welcome coming out of the “conservative closet,” or if they would rather stay silent and not upset the applecart. If the latter, Apple’s future performance may suffer. Pushback is massively important in corporate problem-solving and innovation.
In its no-action letter, Apple’s lawyers repeatedly insisted that they didn’t understand the term “ideological diversity” and that its shareholders would likewise be unable to discern its meaning. That the company spent resources to resist greater diversity should bother all investors as much as the insult that Apple thinks they can’t comprehend common English terms. As I wrote in our response to Apple’s letter, “Most middle-school civics students would understand our proposal.”
The idea for our proposal came after three tech shareholder meetings last year in which Amazon, Alphabet (GOOGL) and Facebook (FB) each adopted left-wing board diversity proposals pushed by groups such as the Service Employees International Union. These proposals also had the stated goal of reducing corporate groupthink, but called on the 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 Asians or Latinos or black Americans think the same based on their respective skin color.
Diversity derives from an individual’s thoughts, beliefs, ethos and experiences. Anyone seriously committed to diversity knows this.
We proposed an honest diversity addendum to Apple’s board selection procedures and the company tried to quash it. By voting to approve our shareholder proposal, investors in this Silicon Valley mainstay have the opportunity to show the company that diversity indeed has merit.
- Danhof is director of the Free Enterprise Project at the National Center for Public Policy Research.
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Author: JOHN MERLINE