Tractor Supply takes Important Steps to Build Diversity in its Leadership Ranks

BOSTON, MA // (April 09, 2020) Businesses in every sector are facing myriad of decisions that impact employees, customers, communities and shareholders today and long into the future as a result of the Covid-19 crisis. Part of our work as investors is to ensure companies have strong governance structures in place at the board and leadership levels necessary to drive prudent and fair decision making. When diversity of skills, expertise, gender, race and ethnicity are well represented at the highest levels of decision making the benefits enterprise-wide and for all stakeholders increases.
We saw this in February when the New York Times reported on decisions made by executive leaders of Microsoft just after Washington state confirmed its first death due to the virus. Recognizing early on that Covid-19 was the “type of issue that could lead smart people without expertise to make poor decisions”[1] executives sought out the company’s specialist on public health, Colleen Daly, to inform their strategy and actions. Guided by her expertise and others, Microsoft in early March became one of the first major employers to take decisive measures to safeguard its employees and ultimately the surrounding communities by issuing work from home orders for tens of thousands of employees.
Diverse leadership and good governance reduces group think which is among the reasons we are pleased to announce that Tractor Supply Company (NASDAQ: TSCO), the largest U.S retailer catering to rural living, has made commitments to strengthen its diversity and inclusion policies and practices in its workforce.
When Trillium and investor partner, Impax Asset Management | Pax World began engaging Tractor Supply’s management in November, 2019 and filed a shareholder proposal addressing diversity in its executive leadership ranks, the company had no women on its executive management team and just one women in a Senior Vice President role. After a series of dialogues with management which resulted in a number of commitments from the company we withdrew the proposal in February.
In exchange for withdrawing our proposal and in continuing to enhance disclosure and strengthen efforts to expand diversity at the highest levels the company the Board agreed to include in the March 2020 proxy:

a statement addressing its commitment to work closely with the executive team to implement new diversity, equality and inclusion initiatives that will result in a more diverse management team;
disclosure of steps the company has taken over the last 18 months to increase expanding gender diversity in the executive and management ranks;

a commitment to publish workforce composition data by gender and underrepresented minority status;
disclosure of its a commitment to pay equity and action to analyze pay gaps; and
a description of the diversity and inclusion governance structure the company is working to put in place.

Importantly, additional steps have been taken such as the February 2020 promotions of three women and one man to the executive management team. Women now comprise 30 percent of the executive management team, comparable to gender diversity on its board of directors.
Trillium is pleased that Tractor Supply engaged in a productive dialogue where we were able to reach a mutually agreeable resolution. When Boards define clear steps and commit to strengthen transparency, companies are more likely to be successful in expanding workforce diversity and opportunity across gender, race and ethnicity. We are encouraged by the actions Tractor Supply’s Board is taking to advance gender diversity in its leadership ranks.
Important Disclosure: This is not a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. The specific securities were selected on an objective basis and do not represent all of the securities purchased, sold or recommended for advisory clients.
[1] https://www.nytimes.com/2020/03/15/technology/microsoft-coronavirus-response.html