News: U.S. corporate reformers face more fights to get proxy votes.
BOSTON / NEW YORK (Reuters) – U.S. corporations are fighting harder this year to keep activist shareholder proposals from voting at their annual meetings, in part due to increasing investor demands for racial justice reforms.
The trend highlights the high stakes for the acting head of the US Securities and Exchange Commission, who outlined reviews of the shareholder filing process and voting disclosure in two speeches this week.
Over the past year, the Trump administration’s agents for the SEC raised the bar for shareholders to vote on matters, even as investors poured money into the hands of fund managers who selected stocks based on sustainability criteria and frequently passed resolutions on environmental, Support social or corporate governance issues.
At the same time, the protests against Black Lives Matter in 2020 sparked a new wave of investor proposals, focusing on issues such as a diverse workforce and better working conditions for employees whose jobs they are putting at risk during the pandemic. Companies have asked to skip many of these voices. “While companies are having a good game of talking about it, proponents are pushing them for substance, and it’s a really sensitive topic,” said Heidi Welsh, executive director of the Sustainable Investments Institute, which tracks the region.
This year, companies have asked the SEC for permission to skip 33% of 437 shareholder resolutions at their annual meeting on Monday, up from 27% last year and 26% in 2017, according to a Welsh review for Reuters News.
Companies typically request SEC permission to skip votes, and they can do it about half the time. For example, they argue that proposals relate to normal business or have already been implemented. Even when reform proposals take over the proxy, management typically recommends investors to vote “no”.
This week, Lee said the SEC will review voting rules and may change how companies ask to skip votes. The SEC could revise guidance on when resolutions on major policy issues dwarf normal business concerns, lawyers said. Some companies have indicated a willingness to do business with proponents, at least on climate-related issues. However, companies have also decided to block votes, especially on the new resolutions.
This season, Citigroup Inc and others sought to rule out proposals from shareholders calling for “racial justice” tests of the impact of their business on non-white stakeholders and color communities.
Citigroup argued that it had “substantially implemented” internal and external initiatives to promote racial justice in finance. The SEC rejected this argument, and the proposal will be presented to shareholders next month.
In its March 17 proxy statement, Citi urged shareholders to vote no and said it had “clearly demonstrated” initiatives to combat racial inequality. A spokeswoman said she had allocated over $ 1 billion to efforts like expanding access to credit.
In another case, Amazon.com Inc argued to the SEC that it should be allowed to skip a resolution tabled by the New York pension leaders asking them to review their efforts to “assess the health and safety risks posed by those affected Coronavirus pandemic to reduce or diminish “its workforce.
Amazon told the SEC that it has already released details of its response and that it has “growing confidence in the safety of our employees at work” and is awaiting a decision from the agency. A spokesman cited further details in the request, including that more than $ 10 billion was spent on Covid-related efforts last year to keep employees safe and get products to customers.
Activists hope Lee’s efforts will facilitate the submission of proposals and that SEC officials, under democratic leadership, will allow more votes.
But Lee also said she hoped to “clarify” and reduce the number of unnecessary filings. Alston & Bird attorney, Dave Brown, said they would raise fewer objections if the SEC “could incentivize proposals from shareholders not to waste everyone’s time.”
Reporting by Ross Kerber in Boston and Jody Godoy in New York. Arrangement by Simon Jessop and David Gregorio
Original Source © Reuters