Shareholder Advocacy Overview
Shareholder advocacy is when investors use their rights as a shareholder of a publicly traded corporation to create change within or for the corporation. This can be done through the use of shareholder resolutions, or proposals, and voting by shareholders.
Shareholders resolutions may be introduced by shareholders who hold at least $2,000 worth of shares or 1 percent of the company’s shares in a publicly traded corporation for at least one year prior to the filing deadline. The introduced resolution, if not resolved, is to be voted on by shareholders at the next annual meeting, typically held December – February.
Shareholders receive notification of the vote via their elected method of notification (e.g. mail or electronically). Special shareholder meetings are also infrequently called.
2019 Shareholder Resolutions
Nearly 400 shareholder resolutions were filed in 2019. A list of resolutions may be found on Green America’s Shareholder Resolution website.
The number of environmental, social, and governance (ESG) shareholder proposals filings by proposal category in 2019 can be seen in the table below.
A sample of resolutions filed is:
- Report on gender/minority pay disparity (Alphabet)
- Adopt greenhouse gas reduction targets (Amazon)
- Report on greenhouse gas reduction goals (ExxonMobil)
- Review/report on election spending (Ford Motor)
- Report on supply chain prison labor (Home Depot)
- Report on deforestation impacts of supply chain (Kroger)
- Establish a board committee on human rights (Mastercard)
- Phase out antibiotic use in animal feed (McDonalds).
ESG Shareholder Resolution Success
As You Sow, a non-profit which promotes environmental and social corporate responsibility, is one of the leading filers of shareholder resolutions. As You Sow engaged with companies on 93 resolutions in the 2019 proxy season. The non-profit successfully negotiated over half the 93 resolutions, securing substantive actions or commitments from the companies. Twenty-one resolutions went to a shareholder vote and earned on average 27% in support.
To get official shareholder approval, shareholder proposals need to be supported by at least two-thirds of the corporation’s outstanding shares. A may be resubmitted if it wins the support of at least 3 percent of the shares voted in its first year, 6 percent in its second and 10 percent in its third year and all years thereafter.
What does this all mean for you?
When you own a direct stock in a corporation, you’ll receive either a letter or e-mail notifying you that it is time to vote in the annual meeting. The “proxy statement” for the meeting will provide further details about proposals. Note that, if desired, you can vote on the proposals which are important to you and abstain from voting on other proposals.
Use your power and vote!
Photo by Edwin Andrade