F5 Networks – Workforce Diversity (2017)
Outcome: Successfully withdrawn following company commitment to disclose strategies, action plans and reporting in upcoming Corporate Social Responsibility Report, March-April 2017.
McKinsey & Company found companies with highly diverse executive teams had higher returns on equity and earnings performance than those with low diversity, and a May 2014 study found gender diverse teams were better at driving “radical innovation”.
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, products, and services”.
However, F5 Networks does not disclose workforce data, or share results of diversity initiatives. Shareholders have insufficient information to determine if the company has a diverse workforce or has been successful in expanding diversity.
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”.
According to a USA Today analysis of 2014 Computing Research Association data, “[t]op universities turn out black and Hispanic computer science and computer engineering graduates at twice the rate that leading technology companies hire them.”
Industry peers including Cisco, Apple and HP provide EEO-1 data and describe programs or partnerships focused on achieving greater workforce diversity. Leading tech firms such as Intel are disclosing EEO-1 data and setting diversity goals. The company set a public, time-bound goal for hiring women and underrepresented minorities and tied a portion of every employee’s 2015 variable compensation to achieving its goal. In August, 2015 Intel reported that it exceeded its target of 40 percent hires of women, blacks, Hispanics and Native Americans in the first six months of the year.
Further, more than two dozen startups and venture capital firms, motivated by the efforts of Kapor Capital, have begun sharing strategies and setting diversity metrics.
Diversity benchmarks can help ensure companies create workforces necessary to compete effectively. In our view, companies that are publicly accountable to diversity goals are most likely to make rapid progress toward achieving their 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 gender and racial diversity in the workplace.
Supporting Statement: A report adequate for investors to assess strategy and performance would include a review of appropriate time-bound benchmarks for judging current and future progress, and details of policies and practices designed to reduce unconscious bias in hiring and to build mentorship among staff of color.