Surveillance, Political Spending, Climate Change, and Your Stocks

Shareholders are agitating for change at public companies this year.

Mar 10, 2014 at 6:30PM

Unless you're talking about Berkshire Hathaway, most annual shareholder meetings elicit yawns. However, these meetings represent a season during which shareholders can vote on important topics at their companies. Annual proxy statements include ballots involving much more than the well-known "say on pay" votes.

Do you care about topics like:

  • NSA surveillance data requests to telecom companies and other public companies?
  • Disclosure of companies' political spending, such as campaign contributions and lobbying?
  • Gun control?
  • Whether companies should focus on environmental concerns such as climate change and general sustainability?

These topics are among just a few shareholder resolutions targeting public companies this year. It benefits shareowners to take a look at what kinds of changes some shareholders are demanding -- and how they feel about any possible shifts in policy or disclosure at the companies they own.

Beyond CEO pay
The Sustainable Investments Institute, As You Sow, and Proxy Impact joined to release their 10th annual report covering the upcoming proxy season: "Proxy Preview 2014."

Overall, political-spending resolutions continue to make up a great deal of the shareholder resolutions that are being filed for the 2014 proxy season. Political activity related to public companies makes up 30% of the resolutions.

Environmental and social proposals are increasing, including resolutions on companies' policies and plans regarding climate change. This year, 417 resolutions have been filed -- 50 more than last year. Companies have challenged 87 proposals.

Off the beaten track
Our increasingly surveillance-driven society is a hot-button issue. Many Americans are increasingly concerned about whether Big Brother is watching.

Shareholders filed resolutions at Verizon (NYSE:VZ) and AT&T (NYSE:T) asking for more disclosure about the number of requests they get for citizens' data. Verizon has been the first to agree to release semiannual reports.

Net neutrality isn't related to Internet surveillance, but it's still considered important to anyone who relies on the Internet (pretty much everyone). Verizon is also subject to a shareholder proposal about the controversial policymaking. Recent news that Netflix (NASDAQ:NFLX) will pay Comcast (NASDAQ:CMCSA) to ensure faster service isn't a direct net-neutrality issue, but in the last several weeks, it has reminded the public and investors about the contentious concept of entities paying more for preferential, faster service.

After the Sandy Hook tragedy and other mass shootings, Amazon.com (NASDAQ:AMZN) is subject to a shareholder proposal regarding sales of guns through its massive e-commerce service.

Leave those companies alone
Shareholder resolutions related to environmental and social issues are increasing. For the most part, shareholders who focus on these areas have been pushing for better policies, better disclosure, and stronger actions to address sustainability issues.

However, here's a new twist: Some shareholder proposals suggest that companies avoid these subjects, along with several others.

The National Center for Public Policy Research has filed 12 proposals that advocate regulators and shareholders getting out of the way on some issues. The conservative think tank asserts that:

  • Corporations have the right to political spending for elections;
  • There's too much environmental regulation; and
  • Health care provision should be governed by free-market principles.

Cook's heated response
The push and pull of opinions at one high-profile tech giant made news headlines: Apple (NASDAQ:AAPL)CEO Tim Cook became non-Jobsian in his response to criticism. At Apple's annual meeting, Cook responded heatedly to The National Center for Policy Research's proposal to avoid environmental commitments unless they increased profit.

Cook mentioned what many of us already know: Environmental initiatives can boost bottom lines, even if the financial benefits aren't realized tomorrow or next quarter. These are long-term investments. He also said: "We do a lot of things for reasons besides profit motive. ... We want to leave the world better than we found it."

Cook went so far as to say that those who were unhappy with Apple's environmental policies could do the "Wall Street Walk" -- i.e., sell their shares. There's good reason to feel distaste for a "like it or lump it" attitude, but in this case it reflects long-term vision.

Rock the vote
Votes for shareholder resolutions are non-binding, but they illustrate the issues corporate managements (and shareholders) should at least be aware of. These address the myriad ways businesses are run and strategies investors believe should or shouldn't change. They also illustrate increasing interest in topics.

As part-owners of public companies, we have every right to wonder whether our companies' policies align with our moral compasses and improve companies' competitive advantages.

Given the many resolutions filed, it looks set to be the most interesting proxy season yet.

Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.

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Alyce Lomax has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com, Apple, Berkshire Hathaway, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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