ADF urges SEC to reject ‘absurd’ plea of ignorance from government contractor IBM

ADF is urging the U.S. Securities and Exchange Commission to reject IBM’s request to exclude a shareholder resolution on Diversity, Equity, and Inclusion (DEI) from the proxy ballot at its upcoming annual meeting. The company argued that it cannot understand or define DEI properly, which ADF calls “absurd.” DEI policies have been a significant topic in various sectors, including business and politics, and gained attention with President Trump’s executive actions to address DEI in government entities, government contractors like IBM, and the private sector. A leak of remarks by IBM’s CEO in response to a question about DEI led to a lawsuit, and the shareholder resolution is based on these comments.

Jeremy Tedesco, ADF Senior Counsel, emphasized that public corporations like IBM should not hide crucial information from shareholders, especially when the corporate decisions on DEI impact stakeholders significantly. President Trump’s recent executive orders on DEI in federal contracting regulations directly affect IBM’s policies. The legal and reputational risks associated with DEI policies outweigh the perceived benefits, making transparency vital for shareholders to make informed decisions about their ownership rights in the company.

A resolution filed by The Heritage Foundation requested IBM’s board of directors to provide a report on the effects of its DEI policies following leaked footage of CEO Arvind Krishna and IBM’s subsidiary Red Hat chairman, Paul Cormier, discussing DEI commitments. In the video, Krishna mentioned that managers’ bonuses depend on meeting internal DEI hiring requirements, while Cormier bragged about holding leaders accountable for not meeting DEI expectations. A state discrimination lawsuit followed the leak.

ADF has a successful track record defending shareholder resolutions at the SEC, with an 8-0 record in the past three years. Publicly traded companies can make no-action requests to exclude resolutions from proxy ballots, which the SEC decides on after reviewing the company’s appeal and the shareholder proponent’s response. ADF has won resolutions at companies like John Deere, Starbucks, and Apple this year and even got a resolution on Disney’s ballot, advocating for shareholder views over far-left activists.

John Backiel, Vice President of Finance and Accounting at The Heritage Foundation, highlighted the importance of IBM’s leadership providing insight into the business decisions that impact shareholder investments and aligning with respectful human dignity values. ADF is committed to fighting against discriminatory DEI policies and advocating for free speech, religious freedom, and the sanctity of life.

ADF’s efforts against corporate cancel culture aim to establish a business ethic that respects fundamental rights and values. Jeremy Tedesco, in his role as senior counsel and senior vice president of corporate engagement at ADF, has been instrumental in leading these efforts, including convening the Philadelphia Statement, which focuses on restoring free speech and civil discourse. Tedesco has an extensive background in litigating First Amendment cases, including representing Jack Phillips in the Masterpiece Cakeshop case before the U.S. Supreme Court and arguing other cases at the federal appellate level. He holds a Juris Doctor from the Regent University School of Law.