Tractor Supply Company | Report on Costs of Low Wages at Tractor Supply Company

Status
14.74% votes in favour
AGM date
Previous AGM date
Proposal number
4
Resolution details
Company ticker
TSCO
Lead filer
CorpGov.net
Resolution ask
Report on or disclose
ESG theme
  • Social
ESG sub-theme
  • Diversity, equity & inclusion (DEI)
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Discretionary
Company HQ country
United States
Resolved clause
Shareholders ask that the board commission and publish a report on whether the Company
participates in compensation and workforce practices that prioritize Company financial performance over the economic and social costs and risks created by inequality and racial and gender disparities and the manner in which any such costs and risks threaten returns of diversified shareholders who rely on a stable and productive economy.
Supporting statement
The Company’s starting wage is $11.25 per hour and its median employee was paid $24,437, or 0.15% of the CEO’s compensation. By comparison, the living wage was $16.54 per hour, or $34,404 per for a family of four (two working adults, two children) in 2019. While the Company’s workforce is 49 percent female and 17 percent minority, those groups make up only 21 percent and 5 percent of executive and senior management.

Research reveals that such inequality and racial disparity harm the entire economy:

• Income inequality slows U.S. economic growth by reducing demand by 2 to 4 percent.
• A 1% increase in inequality leads to a 1.1% per capita GDP loss.
• Gender and racial gaps created $2.9 trillion in losses to U.S. GDP in 2019.
• Eliminating racial disparity would add $5 trillion to the U.S. economy over the next five years.

This drag on GDP directly reduces returns on diversified portfolios, and creates serious social costs that further threaten financial markets. For example, excessive inequality can erode social cohesion and heighten political polarization, leading to social instability.7 It also increases health costs and decreases the value of human capital, through links to more chronic health conditions developed earlier in life.

By paying so many of its employees less than a living wage, the Company increases its margins and thus financial performance. But gain in Company profit that comes at the expense of society and the economy is a bad trade for most Company shareholders, who are diversified and rely on broad economic growth to achieve their financial objectives. The costs and risks created by inequality will directly reduce long-term diversified portfolio returns.

This proposal asks the Board to commission a report that analyzes the trade-offs the Company makes between financial return and the global economy and cohesion, and how those trade-offs affect diversified shareholders. Such a report would not require precision: identifying areas where the Company creates inequality and racial disparity and analyzing how they might manifest as costs or risks to diversified portfolios would help determine whether and when the Company should prioritize employee
equality and welfare over financial returns.

DISCLAIMER: By including a shareholder resolution or management proposal in this database, neither the PRI nor the sponsor of the resolution or proposal is seeking authority to act as proxy for any shareholder; shareholders should vote their proxies in accordance with their own policies and requirements.

Any voting recommendations set forth in the descriptions of the resolutions and management proposals included in this database are made by the sponsors of those resolutions and proposals, and do not represent the views of the PRI.

Information on the shareholder resolutions, management proposals and votes in this database have been obtained from sources that are believed to be reliable, but the PRI does not represent that it is accurate, complete, or up-to-date, including information relating to resolutions and management proposals, other signatories’ vote pre-declarations (including voting rationales), or the current status of a resolution or proposal. You should consult companies’ proxy statements for complete information on all matters to be voted on at a meeting.