2024 Proxy Vote Alerts
Top Ten Votes – Independent Majority Votes – Proxy Season Review
WELCOME TO THE FINAL WEEK OF PROXY PREVIEW’S ESG PROXY VOTE ALERTS.
Proxy season is coming to a close and more than 90 percent of this year’s annual meetings and proxy votes are completed. On July 11 we will host our proxy season review webinar, but for now we take a quick look at some top votes.
CORRECTION: An earlier version of this alert mistakenly listed an AI resolution at Warner Bros. Discovery as the third highest vote. A corrected version is below.
Top 10 Votes
This year’s top ten votes so far on environmental, social policy and sustainable governance issues are:
Data courtesy of Heidi Welsh, Sustainable Investments Institute
Climate Change
Concerns about climate change accounted for three of the top four votes—with 56.5% at Jack in the Box (#1 highest vote), 52% at Wingstop (#2) and 49.8% at Denny’s (#4). Those three resolutions, along with a proposal that earned 40% at Dine Brands (#14), were filed by The Accountability Board, a new shareholder advocacy group that focuses on the food industry. Climate change and related extreme weather events significantly threaten agriculture and the global food supply system. Rounding out the Top Ten was a 42.1% vote for a climate resolution by John Chevedden at Quest Diagnostics (#10) that specifically asked for the use of science-based targets in determining GHG emissions reduction. These votes highlight investors’ growing recognition that climate risk affects companies well beyond the energy sector.
Corporate Political Influence
Election spending produced the other biggest set of top-10 votes, with 52% at DexCom (#3), 49% at Crown Holdings (#6) and 45% at Spirit Aero Systems (#8). The longstanding resolution from the Center for Political Accountability (CPA) was new to these companies, and asked for board oversight and disclosure of policies, procedures and expenditure details for direct and indirect campaign contributions. Virtually all S&P 500 companies provide some level of election spending disclosure; all three of these companies scored poorly on the CPA’s annual Index, with no board oversight and lagging disclosure at DexCom and Spirit Aero Systems and no policy, disclosure or board oversight at Crown Holdings. The votes show that investors clearly expect companies to meet oversight and disclosure standards that have become the norm. Nineteen CPA resolution averaged about 26 percent support this year, while 21 lobbying proposals averaged 29 percent. Political influence made up the biggest single topic among the top 50 votes.
Artificial Intelligence (AI)
A 43% vote at Netflix (#9) and 35.5% at Apple (#22) reflect ongoing controversies about how AI affects workers and the general public. For both the entertainment and tech industry, AI’s ability to generate new content and mimic or alter existing content has prompted concerns about intellectual property and copyright infringement, while also raising alarms about mis- and disinformation. A patchwork of U.S. privacy laws and AI’s power is driving heightened scrutiny about the unprecedented collection and use by companies of terabytes of personal data. AI development has outstripped laws that could guide it and the resolutions, filed by the AFL-CIO, asked companies about their use of AI and any ethical guidelines they employ.
Gender and Racial Pay Gaps
About half of the 100 largest U.S. companies report adjusted pay data, and an increasing number disclose unadjusted median pay gaps as well. Together, adjusted and unadjusted pay gaps shed light on employees’ equal pay and opportunity. American Tower does not report quantitative unadjusted or adjusted pay gaps and a resolution, by Arjuna Capital, asking for that data received 49% support (#5). As with political influence spending, investors have come to expect a certain level of disclosure on this issue, resulting in strong votes at companies outside the norm. Six of this year’s gender and racial pay gap resolutions made it into the top 50 votes.
Workers’ Right to Collective Bargaining
Union workers flexed their muscles in 2023 with the largest number of strikes in 20 years, including the unprecedented and successful United Auto Workers’ strike in the auto industry last fall, while the Writers Guild of America and Screen Actors Guild strikes shut down Hollywood for months. Starbucks and other restaurant companies also face ongoing organizing efforts, as does Amazon.com. Yet one of the longest strikes in U.S. history, a nearly two-year walkout at Warrior Met Coal in Alabama, prompted one of the highest votes in this year’s proxy season. Coal miners have returned to work despite no new contract and a ruling from the National Labor Relations Board that the company violated labor laws. Investors gave 46% support to an AFL-CIO proposal at Warrior Met Coal (#7) asking for “an independent, third-party assessment of the Company's respect for the internationally recognized human rights of freedom of association and collective bargaining.”
Independent Majority Votes
When is a majority vote not a majority vote? When it is at Meta, Alphabet, Hershey and a handful of other tech and family-owned companies with dual class shares that mean a small group of insiders has disproportionate control. Advocates for good corporate governance have long been concerned about how dual class share structures means investors have far less sway with publicly traded companies, which they believe undercuts accountability.
In the case of Meta Platforms, CEO Mark Zuckerberg owns approximately 13% of outstanding shares but his special class of shares count ten times more than the stock held by others; this means he controls about 62% of the vote. Ten resolutions at the company this year mostly earned modest votes when the differential voting power is considered, but the results change dramatically when Zuckerberg’s 10-1 vote is excluded. Without his unequal voting power, five shareholder proposals earned a majority. Further, one director earned less than a majority and three others got only slightly more than 50 percent support; in addition, more than 90% of non-management shares were voted against the equity incentive plan – which passed only because of the dual-class share structure.
Two of this year’s corporate governance shareholder resolutions tried to address the dual-class inequality. A resolution seeking an end to the dual-class structure received an overwhelming 84% of the independent vote. Another calling for vote disclosures by share class (as shown in the table above) got 54.7% support from independent shares. Additional independent majorities were 59.1% for a child safety report, 56.5% for an independent lead director who could expand board meeting agendas (eroding Zuckerberg’s control), and two AI-related votes on mis- and disinformation (53.6%) and targeted advertising (46.3%).
We hope you enjoyed our 2024 proxy season alerts.
