Palo Alto Networks really, really doesn’t want to share its workplace demographics.
When an investment firm asked the cybersecurity company to disclose its diversity numbers, Palo Alto Networks – which has 11 men and one woman on its management team – refused.
When the investment firm, Trillium Asset Management, put it to a shareholder vote, Palo Alto Networks’ board – made up of 10 men and one woman – officially opposed it.
Then, earlier this month, the tech company’s shareholders voted. There were more than 30 million votes in favor of disclosure, and just over 29 million votes against. It was a rare majority for a shareholder resolution facing company opposition.
But Palo Alto Networks didn’t see it that way. By counting nearly 2 million abstentions as votes against the proposal, the tech firm proclaimed that the resolution failed, with 49 percent in favor.
Palo Alto Networks didn’t respond to requests for comment. Susan Baker, Trillium’s vice president of shareholder advocacy, called the company’s approach short-sighted.
“Palo Alto Networks shareholders sent a strong message,” she said. “It’s time to stop making excuses.”
Tech firms are facing pressure to disclose the race and gender breakdown of their employees as a way of being held accountable for diversity efforts. All companies with 100 or more employees already provide the data to the government each year in what’s called an EEO-1 report.
This year, Reveal from The Center for Investigative Reporting surveyed 211 of the top tech companies in Silicon Valley, asking them to provide their EEO-1 reports. Only 23 released them.
Members of Congress such as Rep. Ro Khanna, whose district encompasses Palo Alto Networks’ headquarters, have called for tech companies to share the numbers.
Institutional Shareholder Services, which provides research and advice on shareholder resolutions to large investors, recommended a yes vote on Palo Alto Networks’ diversity proposal.
In an analysis provided to clients, the advisory firm wrote that Palo Alto Networks “does not provide information on any board or management level oversight of its diversity and inclusion practices.” Diversity, the analysis stated, “can have a positive effect on long-term value creation.”
“Increased disclosure of the type requested in this proposal could be of value to shareholders without causing undue burden to the company, given the fact that the company already collects the EEO-1 data that is being requested,” it said.
The California State Teachers’ Retirement System, which held 162,677 shares in Palo Alto Networks as of Nov. 30, voted in favor of the diversity proposal.
Palo Alto Networks’ decision to count abstentions as votes against the resolution is a controversial practice. A 2013 survey found that 52 percent of companies in the Standard and Poor’s 500 index counted abstentions that way, while just under 48 percent did not.
Major investors, such as the New York City pension funds and the California Public Employees’ Retirement System, oppose the practice. So does the California teachers’ pension fund.
“We believe abstentions should NOT be counted when calculating vote tallies,” a teachers’ pension fund spokeswoman wrote in an email.
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