Lobby group names and shames companies omitting shareholder resolutions

The Interfaith Center on Corporate Responsibility has launched a public resource which names the companies that have declared their intention to unilaterally omit shareholder resolutions.

The action is in response to the Securities and Exchange Commission's (SEC) decision in November last year to no longer respond to complaints regarding or make determinations regarding a company's decision not to put forth a shareholder proposal for vote.

Traditionally, if a company explained to the SEC why it believed it could exclude a proposal from its proxy statement, the SEC would consider its explanation and a challenge from the group that lodged the resolution before deciding whether to concur with the request. This was referred to as the "no-action" process as companies were effectively the SEC to ensure no enforcement action would be taken if the proposal was omitted.

Since the change, the ICCR says some companies have used the SEC's new position to blunt investors' ability to influence outcomes.

Now, the ICCR is naming each of the companies challenging environmental and social proposals, with all of them having been reviewed by a legal team which have deemed them "especially troubling", it said.

It said these companies "are behaving opportunistically by offering weak or meritless arguments to support their announcements that they intend to exclude proposals."

"Some companies made specious arguments to exclude a long-established category of proposal that had enjoyed significant voting support," it added, speaking of political spending disclosures.

On the list are the likes of Amazon, BP, UnitedHealth, Chubb, and Dell.

Tim Smith, senior policy advisor at ICCR, said the new resource is an especially useful tool for investors evaluating their votes and engagement with companies regarding their decisions to unilaterally omit resolutions.

"Clearly a number of companies decided to take advantage of the SEC's withdrawal from the proxy process and drop resolutions that had history and deserved to be included in the proxy for a vote. This constitutes a frontal attack on shareholder rights, and we expect many investors to hold companies accountable for these actions," he said.

"Already many large institutional investors have declared they will be voting against select directors in response, or asking pointed questions of management. The Spotlight reminds companies that it was not a risk-free decision to simply drop a resolution because they didn't like its focus.

"We are hopeful that this Spotlight, together with proposed actions by investors, might convince some of those named to do the right thing and include the challenged proposals in their proxy statements so that shareholders have an opportunity to vote on them at their annual meetings."