The measure passed Friday during Apple's annual meeting is
nonbinding, so the Cupertino, California, company isn't required to adopt the
recommendation.
But rebuffing the wishes of its shareholders would thrust
Apple into an uncomfortable position, especially since the company has long
cast itself as a champion of civil rights. CEO Tim Cook reiterated that belief
Friday in response to a question from a shareholder during the meeting held
remotely.
“I have long believed that inclusion and diversity are
essential in their own right," Cook said. “And that a diversity of people,
experiences and ideas is the foundation for any new innovation."
Like other major technology companies, Apple's workforce —
particularly in high-paid technical positions — consists primarily of white and
Asian men, an imbalance that the industry has been trying to address for many
years.
Apple's board had pushed against the shareholder proposal
seeking a civil rights audit that eventually be made public. The company
pointed to its recent strides in civil rights inside and outside Apple that
have made a third-party audit of its practices unnecessary.
The initiatives included Apple making a $130 million
commitment to a racial equity and justice fund after the 2020 murder of George
Floyd in Minneapolis. The company also says it is raising the pay of women and
minority employees while also hiring more female, Black and Hispanic workers.
During Friday's meeting, Cook said Apple has achieved gender
pay equity every year since 2017 and now has racial pay equity within the U.S.
He also said 59% of Apple's leadership positions during the past year have been
filled by people from “underrepresented communities."
But proponents of the civil rights proposal insisted Apple
hasn't been doing enough, making it imperative for outsiders to investigate
recurring reports of sexual harassment, discriminatory practices and other
abuses within the company, which employs 154,000 worldwide.
The proposal gained momentum after Apple last year hired a
former Facebook product manager, Antonio Garcia Martinez, to join its ad team
__ a move that sparked an outcry among employees who accused him of making
misogynistic and racist remarks in a 2016 book called “Chaos Monkeys."
Apple quickly cut its ties with Garcia Martinez after the backlash.
Apple also raised widespread privacy concerns last year by
announcing plans to scan iPhones for images of child sex abuse. Complaints
about that scanning program prompted Apple to backtrack from that plan, but it
provided another rallying point for the backers of a civil rights audit.
Most shareholder proposals are overwhelmingly rejected when
they're opposed by the boards of publicly held companies. That was the case for
five other shareholder proposals during Apple's meeting Friday.
Apple shareholders generally have been enthusiastic
supporters of the company because of the tremendous wealth that it has created.
Apple currently is worth nearly $2.7 trillion, with most of the gains coming
during the past two years of a pandemic that has made its products and services
even more popular.
Yet the proposal for a civil rights audit of Apple won the
backing of two advisory firms that often sway the votes of institutional
shareholders. The audit proposal was supported by 5.13 million shares and
opposed by 4.45 million shares, with 131.2 million shares abstaining, according
to a Securities and Exchange Commission filing by Apple.
The outcome “shows that investors want to know if Apple is
making a difference in tackling potential harms to key stakeholders stemming
from its products and policies," said Dieter Waizenegger, executive
director of SOC Investment Group, which was one of the shareholders that filed
the civil rights proposal. “Investors heard from Apple’s corporate and retail
workers who bravely spoke out against inequitable and harmful conditions even
under the threat of retaliation.“
Similar shareholder proposals seeking civil rights audits
have been adopted during the past year at several other publicly held
companies, including CitiGroup.
Although he didn't say whether Apple intends to submit to a
civil rights audit, Cook described gender and racial equity “essential to the
future of our company."