F5 Networks – Workforce Diversity (2019)
Outcome: Successfully withdrawn following the company’s commitment to improve data transparency by publishing annual EEO-1 workforce composition data, and to enhance public disclosures of its inclusion and diversity policies and practices.
The business case for workforce diversity is compelling. McKinsey & Company, for example, found in 2015, and in a larger study in 2017 that highly diverse executive teams had higher returns on equity and earnings performance than those with low diversity. Companies in the top quartile for gender diversity on executive teams were 21 percent more likely to have industry-leading profitability. Companies in the top quartile for ethnic/cultural diversity were 33 percent more likely to have industry-leading profitability.
F5 Networks states that it “recognize[s] that diversity and inclusion are critical for our success; that an individual’s background, experience, and perspective lead to new ideas and insights enriching F5’s performance”. However, F5 Networks does not disclose comprehensive workforce data or share results of diversity and inclusion initiatives.
Lack of diversity among high tech workers is a central public policy concern according to the U.S. Equal Employment Opportunity Commission. In 2014, the Commission reported that the high-tech sector employed a larger share of whites, Asian Americans, and men, and a smaller share of African-Americans, Hispanics and women than the “overall private industry”.
Sector peers including Cisco, Palo Alto Network and Adobe Systems publish EEO-1 data and disclosure inclusion and diversity strategies. Intel set targets for raising the percentage of women and underrepresented minorities in their workforce. Symantec created a sub-goal of increasing its percentage of women in leadership (Director-level and above) to 30 percent by 2020. Financial services sector companies, similarly, have begun setting diversity targets. Citigroup, in August 2018, announced plans to reverse “falling diversity” by setting public quantitative goals and holding senior leaders accountable for meeting them.
Global companies are increasingly recognizing the importance of diversity and inclusion as business and social imperatives. Leveraging the contributions of a diverse employee population creates an environment in which individual differences and capabilities are valued. Further, operationalizing an effective inclusion and diversity strategy requires inclusive leadership and goal setting. Companies that hold themselves publicly accountable to diversity goals are more likely to make rapid progress toward achieving those goals.
RESOLVED: Shareholders request that F5 Networks prepare a diversity report, at reasonable cost and omitting confidential information, available to investors including:
1. A chart identifying employees according to gender and race in major EEOC-defined job categories, listing numbers or percentages in each category;
2. A description of policies/programs focused on increasing diversity in the workplace.
Supporting Statement: A report adequate for investors to assess strategy and performance would include disclosures, such as a review of appropriate time-bound benchmarks for judging current and future progress, and practices in use to ensure progress can be achieved, for example, the extent to which incentive compensation packages include diversity and inclusion goals for named executive officers.