Hot-button Agenda at Nike Shareholder Meeting: Forced Labor

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The extremes of the work-life debate were on full display in Nike Inc.’s annual proxy statement, which set the agenda for the company’s annual meeting and touched both on executive pay and forced labor. 

Shareholders will hold the routine “say on pay” vote advising the company on its executive pay packages at the meeting on Sept. 9, and while the pay is good at the top at Nike, investors have generally given the company the thumbs-up. 

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Less routine is a proposal put forward by Domini Impact Equity Fund and Vancity Investment Management Canadian Equity Fund that “Nike adopt a policy to pause sourcing of cotton and other raw materials from China until the U.S. government Business Advisory [on forced labor in Uyghur Region] is lifted or rescinded.”

That puts at least two hot-button topics on the agenda. 

A shareholder statement supporting the proposed sourcing pause noted, “It has been reported that as many as 1.8 million Uyghur people, a Muslim ethnic minority group in China, have been arbitrarily detained and forced to endure severe human rights abuses, including forced labor, torture and political indoctrination.…The Uyghur region produces approximately 85 percent of China’s cotton, and Nike’s manufacturing data suggests that about 30 percent of its materials were from Chinese factories.…Traditional supply chain risk mitigation measures, such as worker interviews and third-party audits, are unreliable or not effective in this unique, high-risk, conflict-affected context.” 

The statement noted Nike’s “long leadership in supply chain transparency” but said “in this unique context, Nike’s efforts are inadequate.”

Nike’s board advised shareholders to vote against the proposal, noting that it “does not directly source cotton or raw material, and we are committed to responsibly and sustainably sourcing our products.” 

“We collaborate with suppliers who share our commitment to responsible manufacturing,” the board said. 

“While we have worked hard to develop and implement policies and procedures that bring our commitment to life, we are always looking to evolve and improve. We believe that these efforts are a better approach to promoting human rights and sustainability than prohibiting sourcing with respect to any particular country.”

On a more routine, but still often controversial topic: John Donahoe, president and chief executive officer, logged total compensation of $28.8 million last fiscal year — a drop-off from the $32.9 million in pay registered in fiscal 2021 and the $53.5 million in 2020 when the CEO took the job.

The biggest portion of Donahoe’s pay came from stock and option awards valued at a combined $18.8 million, although the value he will actually realize will depend on Nike’s stock performance, linking the CEO’s take to the fortune of shareholders. More immediately accessible, he received incentive pay of $4.5 million and a salary of $1.5 million. 

Donahoe also received “other compensation” made up almost entirely of “$4 million in charitable matching contributions made by the company.” 

“Our philosophy is to ‘pay for performance’ in order to drive business results and maximize shareholder value,” Nike said in the proxy statement. “As a result, executive compensation is highly incentive-based and weighted toward long-term awards to emphasize long-term performance and support retention. Our executive compensation program balances performance incentives, including by using different performance metrics and performance periods, and through a mixture of cash- and stock-based compensation elements.”

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