Eli Lilly & Co. cannot exclude a DEI shareholder resolution from its proxy statement, Securities and Exchange Commission officials said in a recent letter denying the company's request.
The resolution from shareholder advocacy group As You Sow calls on the company to report on the effectiveness of its diversity, equity and inclusion practices and to provide quantitative metrics on hiring, retention and promotion practices by gender, race and ethnicity.
Eli Lilly asked for the resolution to be excluded on the grounds that it had "substantially implemented the essential elements of the proposal," and because it relates to ordinary business matters where such a demand would be micromanaging, according to SEC guidelines, the company said in its own letter to the SEC.
In November 2021, the SEC released new guidelines undoing guidelines from the previous four years that, according to an SEC staff bulletin, "made it difficult for shareholders to exercise their right to present shareholder resolutions for a vote at company annual general meetings."
With the change, "proposals that raise significant social policy issues, and do not micromanage companies, will be allowed to move forward," the staff bulletin said.
As You Sow reports that more than 30 companies have committed to greater DEI disclosure, including the data sets requested of Eli Lilly.
From the perspective of shareholder value, companies with the highest gender diversity are more likely to outperform and the most diverse companies tend to have a higher average stock return, the shareholder advocacy group said in a statement on the SEC action.
The data on hiring, promotion and retention rates show how well a company is managing and developing its workforce, said Andrew Behar, CEO of As You Sow, in the statement.
The SEC letter rejecting Eli Lilly's request was issued Friday.