Posted on Thursday, January 30, 2025

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by AMAC Action

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Facing high-profile lawsuit over public DEI comments from leadership, tech giant should come clean with shareholders at upcoming annual meeting, ADF argues

WASHINGTON – Alliance Defending Freedom attorneys are asking the U.S. Securities and Exchange Commission to deny tech giant IBM’s request to omit a Diversity, Equity, and Inclusion shareholder resolution from the proxy ballot at its upcoming annual meeting.

ADF attorneys call particular attention to the company’s “absurd” claim that the SEC should withhold the resolution from shareholders because IBM is unable to properly understand or define DEI. Discriminatory DEI policies have been a primary point of discussion in business, politics, and culture over the past year or more—reaching a fever pitch with President Trump’s executive actions meant to root out DEI at government entities, government contractors like IBM (whose federal contracts are worth over a billion dollars per year), and throughout the private sector. And as ADF attorneys underscore, the resolution itself draws from leaked remarks of IBM’s CEO in response to an employee’s question about DEI.  IBM is even in the midst of a high-profile lawsuit over these leaked comments.

“Publicly traded corporations like IBM should never hide the truth from their shareholders,” said ADF Senior Counsel and Senior Vice President for Corporate Engagement Jeremy Tedesco. “Perhaps now more than ever, decisions about hotly contested topics like DEI affect every shareholder, customer, and employee. And President Trump’s recent executive orders on DEI in federal contracting apply directly to policies like IBM’s. It is clearer now more than ever that DEI policies introduce steep legal and reputational risks that far outweigh any perceived benefit. That’s why it’s so critical that IBM comes clean and provides its shareholders the transparency they need to make their own decisions about how to exercise their rights as owners in the company.”

Filed by The Heritage Foundation, the shareholder resolution called on IBM’s board of directors to issue a report about the effects of the company’s DEI policies after undercover journalist James O’Keefe released footage of CEO Arvind Krishna and Paul Cormier, Chairman of IBM’s subsidiary Red Hat, responding to an employee’s question about IBM’s DEI commitments. In the video, which sparked a discrimination lawsuit from the State of Missouri, Krishna states that hiring managers’ bonuses hinge on their meeting internal DEI hiring requirements. Cormier immediately one-ups Krishna, boasting about “multiple leaders over the last year plus that were held accountable to the point that they’re no longer here at Red Hat.”

In responding to IBM’s no-action request, ADF hopes to continue its current 8-0 record defending shareholder resolutions at the SEC over the past three years. Publicly traded companies are permitted to file no-action requests to the SEC asking permission to exclude resolutions from proxy ballots, and the SEC makes a final determination once the shareholder proponent has an opportunity to respond to the company’s appeal.

So far this year, ADF has gone 3-for-3 at the SEC, successfully backing resolutions at John Deere, Starbucks, and Apple. An ADF-backed resolution also made it to the ballot at Disney, bolstering the ongoing effort to prioritize the diverse views of shareholders over far-left activists at this year’s annual meetings.

“Discriminatory DEI policies have no place in our country,” said Heritage Foundation Vice President of Finance and Accounting, and Treasurer John Backiel. “Heritage has a vested interest in the long-term fiduciary health of IBM. The very least IBM’s leadership could do is provide insight into the business decisions that not only jeopardize our investment but fly in the face of our organization’s stance on issues of human dignity that affect every American. We’re hopeful that the SEC will deny IBM’s request and allow shareholders to join this crucial conversation.”

Alliance Defending Freedom is an alliance-building, non-profit legal organization committed to protecting religious freedom, free speech, parental rights, and the sanctity of life.