The first U.S. gay rights shareholder resolution ever to be put to a vote received 15.6% support from Cracker Barrel Old Country Store Inc. investors.
Shareholders have been battling the Lebanon, Tenn.-based restaurant chain since Jan. 1, 1991, when the company said it refused "to employ individuals whose sexual preferences fail to demonstrate normal heterosexual values."
The $22-billion New York City Employees Retirement System sponsored the resolution, which asks the company not to discriminate against gay men and women when hiring. The fund also requested that the company include an equal-opportunity policy for gays in its employee manual.
The New York City fund, which holds 268,284 shares of Cracker Barrel, isn't alone.
The $59-billion College Retirement Equity Fund--part of the world's largest pension fund--said it supported the proposal. CREF also said last week that it was voting against the company's slate of directors because Cracker Barrel officials would not meet with the fund.
Institutional investors tend to "vote against management when they have been stonewalling," said Caroline Mathiasen of the Washington-based Investor Responsibility Research Center, which tracks proxy votes.
Cracker Barrel recently rescinded its policy of firing gay workers, but Elizabeth Holtzman, New York City comptroller and a trustee for the pension fund, said it has not issued "a new non-discriminatory policy nor moved to reinstate or compensate fired employees."
Holtzman said the result "sends a clear message that Cracker Barrel has to stop discriminating on the basis of sexual orientation."
Cracker Barrel said in a statement that it hopes shareholders, after losing the resolution, will put the issue to rest "for once and for all."
Because the vote was higher than 3%, shareholders can reintroduce it on next year's proxy statement.
The 15.6% vote, excluding abstentions, is considered high for a first-time proposal, said Mathiasen.
She said recent votes on equal-employment resolutions, which asked only for a report on company practices, received 7.2% support at Wal-Mart Stores Inc. and 8% at General Electric Co.
A resolution sponsored by an individual asking for a more diverse board, including representation by gay men and women, received 9.25% of shareholder vote, Cracker Barrel said. That figure does not include abstentions.
The Securities and Exchange Commission subtracts abstentions from the total shares voted when calculating a proxy vote. That pushes the percentage higher.