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April 29, 2003
Will Dover Heed Shareowners' Loud Call for Sexual Orientation Nondiscrimination?
    by William Baue

Almost half of Dover shareowners want the company to explicitly add sexual orientation to its nondiscrimination policy, but the company has yet to commit to such a decision.

Last year's proxy season ended with a record 58 percent vote on the infamous "Cracker Barrel" shareowner resolution that asked CBRL Group (ticker: CBRL) to bar sexual orientation discrimination in its Equal Employment Opportunity (EEO) policy. In response, Cracker Barrel ended its decade-long resistance by adding sexual orientation nondiscrimination protection to its written EEO policies.

Momentum on the nondiscrimination issue is continuing into the present proxy season. Last week, 42.8 percent of voting shareowners supported a resolution calling on New York-based industrial products manufacturer Dover Corporation (DOV) to amend its EEO policy to include sexual orientation. This represents the second highest vote on a shareowner resolution regarding a social issue where management recommended a vote against it.

"I view this vote as a landmark in my thirty-plus years in shareholder advocacy for greater corporate responsibility," said Tim Smith, senior vice president at Walden Asset Management, which submitted the resolution.

"A company facing a vote this high by its owners ignores that vote at its peril," said Nikki Daruwala, senior analyst and shareholder advocacy coordinator for the Calvert Group, which co-filed the resolution.

However, it remains to be seen whether Dover will follow in CBRL's footsteps by explicitly adding sexual orientation nondiscrimination to its EEO policy.

"It's not a question of changing policy, it's a question of changing the written form of the policy," Joe Schmidt, Dover general counsel, told The company does not discriminate based on sexual orientation, despite the fact that it does not explicitly guarantee protection against sexual orientation discrimination in its EEO policy, Mr. Schmidt explained.

Ken Scott, a portfolio manager at Walden, pointed out that absence of such a policy puts companies at a competitive disadvantage. He said that many gay, bisexual, lesbian, and transgender people avoid working at companies that lack written confirmation to sexual orientation nondiscrimination.

Their wariness has strong foundation, as a recent Harris Interactive/Witeck-Combs survey found that 41 percent of gay and lesbian workers in the U.S. report facing some form of hostility or harassment on the job. The survey also found that almost one out of every ten gay or lesbian adults stated that they had been fired, or dismissed unfairly, or pressured to quit a job because of their sexual orientation.

Sexual orientation nondiscrimination is in the EEO policies of many of Dover's competitors, such as Cummins (CUM), General Electric (GE), and United Technologies (UTX). It's also explicitly stated in the policies of a majority of Fortune 500 companies (60 percent), and 90 of the Fortune 100.

In New York State, where Dover operates, Republican Governor George Pataki signed the Sexual Orientation Non-Discrimination Act (SONDA) in December 2002 to become the thirteenth state to require companies to not discriminate based on sexual orientation. Dover is one of the largest New York companies not to explicitly prohibit such discrimination, whereas other large companies operating in New York, such as IBM (IBM), International Paper (IP), and Verizon (VZ), have.

"So legislative momentum is there," said Mr. Scott. New Mexico recently became the fourteenth state to enact such legislation.

Popular opinion also supports sexual orientation nondiscrimination. A June 2001 Gallup poll found that 85 percent of respondents favors equal opportunity in employment for gays and lesbians.

"We believe it's appropriate that Dover explicitly add sexual orientation nondiscrimination to its policy, and we hope the company will," said Mr. Scott.

Mr. Schmidt told that the issue is on the agendas for the Governance and Nominating Committee as well as the Board of Directors at its meeting next week.


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