Tim Schwarzenberger, who owns a ten-year-old pair of Nike sneakers with holes, seeks a reason to buy a new pair from the company. As a shareholder campaign leader advocating for more transparency from Nike, Schwarzenberger emphasizes the importance of forgiveness if companies reform.
He notes, “I would like to return to buying the shoes, but Nike’s activist stance makes it difficult.” The investor remarks on Nike’s perfect Human Rights Campaign score and ties with DEI that led to a shareholder proposal at an annual meeting.
Schwarzenberger serves as a portfolio manager and director of corporate engagement at Inspire Investing. He represents investors owning Nike stock, focusing on competitive performance for clients.
Nike shareholders rejected Proposal 5 in its annual meeting on Sept. 8. Inspire supported the proposal for client William C. Cunningham.
The resolution requested Nike evaluate and report on the “benefits, costs, and risks” of its charitable support. Citing Nike’s 100 score on the Human Rights Campaign’s Corporate Equality Index, Inspire raised questions about employee health plans covering gender-transition procedures for minors. Nike has not publicly disclosed if these benefits apply to minor dependents.
HRC’s criteria require transgender-inclusive health benefits for full credit, but Nike’s public HRC profile does not reveal age limits or dependent-specific plan details.
The proposal highlighted Nike’s DEI initiatives and noted potential legal and financial risks from advocacy group partnerships. Nike’s board advised rejecting the proposal, stating its existing disclosures and guidelines suitably serve shareholder interests.
Nike argued additional reports would consume resources without investor benefit. Detailed voting results revealed less than 1% support for the proposal.
Most shareholder proposals lack majority support, said Schwarzenberger. “We managed to raise issues relevant to many shareholders.”
Inspire questioned Nike’s “robust” review of charitable partnerships. Schwarzenberger expressed concern over the lack of transparency and the impact of political decisions on Nike’s market position.
Nike’s problems extend beyond politics, facing removal from the S&P 100 as its market cap has dropped over $200 billion since November 2021. Other issues include competition, product challenges, and reduced revenue from Greater China.
Schwarzenberger attributed multiple factors to Nike’s share-price decline. He advised against actions alienating customers, questioning how much is due to political involvement.
Nike’s past political campaigns, such as the 2018 Colin Kaepernick ad and others related to transgender athletes, have sparked controversy. Schwarzenberger stressed neutrality in political matters to refocus on business.
He welcomed Nike CEO Elliott Hill’s comments to refocus on athletes but criticized the response’s lack of strength. Schwarzenberger suggested the company innovate in products and prioritize its core business instead of advocacy.
He likened Nike’s innovative shortcomings to Disney’s reliance on older brands, suggesting it needs new product ideas.
Schwarzenberger stated conservative investors have significant influence through shareholder resolutions. Inspire’s proposals last year led to changes in two-thirds of targeted firms. He urged Americans owning shares via mutual funds to review fund managers’ votes and consider additional investment options.
“You have a voice and responsibility,” Schwarzenberger said, encouraging pressure on companies to abandon distractions and focus on business.
Dan Zaksheske, a reporter at OutKick, provided the report.