Our Letter to Apple

Via Email and Overnight Mail

Arthur D. Levinson
Chairman of the Board
Apple, Inc.

Tim Cook
Chief Executive Officer
Apple, Inc.

September 19, 2022

RE: Strive Asset Management Engagement with Apple

Dear Messrs. Levinson and Cook,

 Strive Asset Management recently became a shareholder of Apple. On behalf of our clients, we write to deliver a simple message to your board: hiring should be based on merit – not race, sex, or politics. 

Apple is one of the world’s greatest companies, ceaselessly showcasing American innovation on the global stage. Your success is undoubtedly powered by your talented workforce. We admire your track record in repeatedly attracting the best and brightest minds to work at Apple. However, we are concerned that over the last year, Apple has faced severe pressure from its large institutional “shareholders” – including BlackRock, the world’s largest asset manager – to adopt value-destroying human resources policies that jeopardize Apple’s ability to hire top talent in the future. We believe these externally imposed hiring constraints create severe economic, legal, and reputational risks for Apple.

In particular, we are concerned by Apple’s recent decision to conduct a “racial equity audit” in response to a 2022 shareholder proposal that received support from BlackRock and certain other of your shareholders. We believe this decision jeopardizes Apple’s value by elevating divisive identity politics above its commitment to excellence, while also raising serious legal and commercial risks for the company.

Racial equity audits do not benefit the companies that conduct them. They are non-neutral evaluations designed to embarrass the companies who elect to conduct them, and there is no evidence to suggest that such audits increase shareholder value. Indeed, the 2022 shareholder proposal essentially admits as much: its proponents claimed that such an audit was required to determine “how [Apple] contributes to social and economic inequality” and to force Apple to “identify, remedy, and avoid adverse impacts on its stakeholders.” Color of Change—one of the activist groups pushing for a racial equity audit at Apple—explains that its mission is “to hold companies accountable for the ways they perpetuate white supremacy.” The purpose of advocacy groups such as Color of Change may be to agitate for social change, but the role of Apple’s board of directors is to serve its shareholders.

Such measures embrace and perpetuate identity politics. They tend to increase in-company racial division rather than ameliorating it. They distract leadership and employees from focusing on core business concerns. They accept and promote claims about “white supremacy” in America that many Apple shareholders, employees, and consumers don’t accept. They sow division among employees and consumers. They are also not cheap: some “auditors” reportedly charge $2,295 per hour.

Racial equity audits generally do not help the “audited” companies: the publication of such reports often trigger more negative news, criticism, and boycotts of the company by certain consumers, while also alienating other consumers who disapprove of the company’s decision to conduct such an audit at all. Such reports may also fuel unwarranted government investigations, employee grievances and meritless discrimination claims. These lawsuits will require bearing more fees charged by attorneys whose hourly rates rival those of the “racial equity auditors” who necessitated such legal services.

We applaud Apple’s board for its initial decision to recommend against this “racial equity audit” proposal. In its proxy statement, Apple’s board firmly opposed the proposal, explaining that Apple was already “committed to respecting human rights, including civil rights.” Even after the nonbinding resolution was approved by a slim majority of shareholders this past spring, the board remained silent. We believe this was the correct course of action.

Yet following additional pressure from advocacy groups like Color of Change, Apple’s board eventually capitulated. Without providing any explanation for its change in position, Apple’s spokesman issued a statement that the company was “deeply committed to building a more just and inclusive world and will continue to engage with a range of stakeholders as we move forward with plans to conduct a civil rights audit.” We are concerned by Apple’s obeisance to “shareholder” and non-shareholder demands which ran contrary to your own board’s recommendations. As shareholders, we respectfully demand the answer to a basic question: why is it in the best interests of Apple’s shareholders for the company to conduct a “racial equity audit”?

We understand that you are in a challenging position when Apple’s top “shareholders” ask you to adopt measures that you believe do not serve their best interests. The fundamental problem is that your purported “shareholders” are not the actual capital owners of your company.

In 2022, the largest asset management firm in the world—BlackRock—was Apple’s second largest shareholder. And its approximate 6.4% stake in the company was enough to sway the overall vote. However, BlackRock is not the actual owner of Apple, its clients are: the everyday citizens who invest in BlackRock’s funds.

You owe a fiduciary duty to the actual owners of Apple, not to the institutions who claim to represent them. There is strong reason to believe that the actual owners do not support racial equity audits or the demands that come with them. While Airbnb’s racial equity report demanded that it conduct “anti-bias training,” fewer than one-third of Americans believe that workplace diversity efforts improve race relations. While Facebook’s racial equity report demanded that it do more to remove so-called “hate speech” and “disinformation,” a December poll shows that most Americans worry more about social media companies censoring the truth than spreading misinformation. While Starbucks’ racial equity report praised Starbucks’s use of racial quotas, 74% of Americans believe that employment decisions should be based on qualifications alone. There is no evidence to suggest that using corporate funds and employee attention to advance these agendas will enhance shareholder value.

We remind Apple that the use of racial quotas can subject an employer to liability under federal law. As you know, Title VII does not permit an employer to deliberately make hiring or promotion decisions on racial grounds, even to alleviate perceived societal racial injustices, unless the company has a strong basis in evidence for believing that its existing workforce composition is the result of Apple’s unlawful past discrimination—a position we doubt very much that Apple’s board wishes to take. Yet the proponents of these racial equity audits often push for companies to adopt illegal policies that then expose the “audited” companies to potential liability. The recently filed lawsuit against Starbucks provides a cautionary tale.

We respectfully urge the company to:

  • Rescind any commitments to conduct a racial equity audit; and
  • Commit to making all employment decisions based on merit, without regard to race, sex, or political beliefs.

We look forward to engaging with your management and board of directors ahead of next
spring’s proxy voting season.


With best regards,
Vivek Ramaswamy
Executive Chairman, Strive Asset Management