Charlotte-based Cato Corporation is facing criticism from a shareholder that has unsuccessfully pushed for the fashion retailer to explicitly ban employment discrimination against lesbian, gay, bisexual and transgender employees.
Boston-based Walden Asset Management on Tuesday lashed out at Cato for preventing a shareholder vote on a proposal requesting the retailer specifically prohibit in its written employment policies discrimination based on sexual orientation and gender identity. Walden was seeking for investors to vote on the measure at Cato’s annual shareholders meeting, which is typically held in May. In January, the Securities and Exchange Commission backed Cato’s plans to block the item from going to a vote.
Walden, which also manages more than 77,700 Cato shares on behalf of clients, in a press release Tuesday noted its proposal was not motivated by concerns of workplace discrimination at Cato. Rather, Walden said it is worried about Cato being among “a shrinking minority” of companies whose nondiscrimination policies don’t include sexual orientation and gender identity.
“We’re little dumbfounded why they won’t just add these words to ... make it very explicit that people will be protected,” said Carly Greenberg, environmental, social and governance analysis at Walden. Among other concerns, the lack of such policy carries risks for shareholders and Cato, which would be better positioned to prevent discrimination if the language were in place, Greenberg said.
“We want to see the company be more proactive,” she said.
CEO John Cato said in a statement to the Observer Tuesday that his company is “proud of our track record of providing opportunities for all, which is supported by inclusive policies and practices that ensure every associate, vendor and customer is treated with respect.”
In a January letter to the SEC, Cato pointed to various reasons why it opposed the proposal, whose co-filers included The Educational Foundation of America. For one, Cato said its Equal Opportunity Employer policy prohibits discrimination based on “race, color, religion, ancestry or national origin, disability, age, sex, or any other legally-protected classification,” in its hiring and terms and conditions of employment.
In his statement Tuesday, Cato said the company is “pleased” with the SEC’s determination “that our current policy had already addressed the shareholder request.” Cato “will vigorously monitor the issue to ensure we continue to comply with all Equal Employment Opportunity laws and regulations,” he said.
Cato, headquartered off South Boulevard in south Charlotte, operates about 1,370 stores in 33 states. It employs about 10,200 full- and part-time workers, including approximately 760 in the Charlotte area.
Walden is among a growing number of mutual funds and asset managers catering to clients seeking investments in companies that make a positive impact on environmental and social issues. Other shareholder proposals Walden has pushed for this year include a measure Wells Fargo investors will vote on next month that calls on the bank to commission a report on the “root causes” of its sales scandal.
In calling for the nondiscrimination policy at Cato, Walden says there is no federal law protecting LGBT individuals from discrimination at work.
Walden also cited a 2017 Human Rights Campaign Foundation survey of Fortune 500 companies that shows 92 percent have Equal Employment Opportunity policies that include sexual orientation and 82 percent that include gender identity.