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A derivative shareholder lawsuit has been filed against The Gap charging the retailer with breach of fiduciary duty, among other charges, because of its all-white board of directors and executive committee and calling for replacing at least two of its current board members with Black directors.
The suit filed in U.S District Court in San Francisco Tuesday charges the San Francisco-based company with failing to have a black executive or board director despite declaring that being inclusive is a “business imperative,” according to the complaint in Noelle Lee, derivatively on behalf of The Gap Inc. vs. Robert J. Fisher et al. and the Gap Inc.
The lawsuit, which was first reported in the D&O Diary blog, includes photos of The Gap’s board and top executives.
Despite its statements to the contrary, the company “has failed to create any true racial or ethnic diversity at the very top of the company on its Board of Directors and executive management team,” the complaint states.
It has “consciously failed to carry out Gap’s written proclamations about increasing diversity in its ranks,” the complaint states. It contends that when the company does hire African Americans and other minorities “it overwhelmingly hires them for low-level and low-paying jobs in its distribution centers.”
The complaint states that African Americas comprise only 4% of employees at the company’s headquarters but 23% of workers in its distribution centers.
Charges in the complaint include breach of fiduciary duty, abuse of control, unjust enrichment and securities law violations.
In addition to seeking a ruling that would requires the company to replace at least two current directors with Black directors, it also seeks a proposal to institute salary history bans in order to help eliminate the racial pay equity gap. It also calls for all director defendants to return their 2020 compensation and donate it to an acceptable charity or organization whose efforts include advancement of Blacks and other minorities, and the creation of a $700 million fund to hire Black and other minority employees and promote them to more management positions, among other measures.
The company did not respond to a request for comment.