Cintas Corp: Greater Disclosure of Material Corporate Diversity, Equity, and Inclusion Data

BE IT RESOLVED: Shareholders request that Cintas Corporation (“Cintas”) report to shareholders on the effectiveness of the Company's diversity, equity, and inclusion efforts. The report should be done at reasonable expense, exclude proprietary information, and provide transparency on outcomes, using quantitative metrics for hiring, retention, and promotion of employees, including data by gender, race, and ethnicity.

SUPPORTING STATEMENT: Quantitative data is sought so investors can assess and compare the effectiveness of companies’ diversity, equity, and inclusion programs.

WHEREAS: Cintas has not released its consolidated EEO-1 form, nor has it shared sufficient quantitative hiring, retention, and promotion data to allow investors to determine the effectiveness of its human capital management programs.

Eighty-nine percent of the S&P 100 and thirty-five percent of the Russell 1000 have released, or have committed to release, their EEO-1 forms, a best practice in diversity data reporting. Between January 2022 and January 2023, the number of Russell 1000 companies releasing recruitment or hiring rate data by gender, race, and ethnicity increased by 64 percent; companies releasing retention rate data increased by 127 percent; and companies releasing promotion rate data increased by 139 percent.[1] The list of companies that release, or have committed to release, more inclusion data than Cintas is extensive and includes Boeing, Devon Energy, General Dynamics, Dow, Ford, Raytheon Technologies, Union Pacific, and Walmart.

Numerous studies have pointed to the benefits of a diverse workforce. Their findings include:

There is a positive association between diversity in management and cash flow, net profit, revenue, and return on equity.[2]

Companies in the top quartile for gender diversity are 21 percent more likely to outperform on profitability.[3]

The 20 most diverse companies had an average annual five-year stock return that was 5.8 percentage points higher than the 20 least diverse companies.[4]

Hiring, promotion, and retention rate data show how well a company manages its workforce diversity.

Companies should look to hire the best talent. However, Black and Latino applicants face hiring challenges. Results of a meta-analysis of 24 field experiments found that, with identical resumes, white applicants received an average of 36 percent more callbacks than Black applicants and 24 percent more callbacks than Latino applicants.[5]

Promotion rates show how well diverse talent is nurtured at a company. Unfortunately, women and employees of color experience “a broken rung” in their careers; for every 100 men who are promoted, only 86 women are. Women of color are particularly impacted, comprising 17 percent of the entry-level workforce and only four percent of executives.[6]

Retention rates show whether employees choose to remain at a company. Morgan Stanley has found that employee retention above industry average can indicate a competitive advantage and higher levels of future profitability.[7] Companies with high employee satisfaction have also been linked to annualized outperformance of over two percent.[8]

[1] https://www.asyousow.org/our-work/social-justice/workplace-equity/

[2] https://www.asyousow.org/report-pages/workplace-diversity-and-financial-performance

[3] https://www.asyousow.org/report-pages/workplace-diversity-and-financial-performance

[4] https://www.wsj.com/articles/the-business-case-for-more-diversity-11572091200

[5] https://hbr.org/2017/10/hiring-discrimination-against-black-americans-hasnt-declined-in-25-years

[6] https://wiw-report.s3.amazonaws.com/Women_in_the_Workplace_2021.pdf

[7] https://www.morganstanley.com/im/publication/insights/articles/article_culturequantframework_us.pdf

[8] https://www.institutionalinvestor.com/article/b1tx0zzdhhnf5x/Want-to-Pick-the-Best-Stocks-Pick-the-Happiest-Companies?utm_medium=email&utm_campaign=The%20Essential%20II%20100721&utm_content=The%20Essential%20II%20100721%20CID_eb103a9e15359075f72a85f7ff534c79&utm_source=CampaignMonitorEmail&utm_term=Want%20to%20Pick%20the%20Best%20Stocks%20Pick%20the%20Happiest%20Companies

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