The season of shareholders’ meetings is now starting in the United States. Apple is holding its meeting this Friday, March 10, Starbucks on March 23, one month earlier than the first European meetings. What is happening in the US will soon be happening in Europe. The season on this side of the Atlantic will open on April 13 with Vinci.
The financial results are good, so a quiet season was expected. Employees and trade unions facing hundreds of thousands of layoffs since January, investors worried about macro indicators have given a social color to the beginning of the 2023 season. A register on which managers are not used to reporting to their investors. The world’s largest investors now believe that the company’s main immediate point of weakness is its cohesion.
They demand good financial performance, which is a prerequisite, good climate performance, which is now enshrined in the law of most states, but also improved working conditions, higher employee wages, transparency on anti-bias policies, employee safety and benefits. The reputation of the company is at stake. Customers want companies that are reputable. Without a good reputation, there is no growth, no performance. Investors are pragmatic.
The pressure on companies is high, as these challenger investors have never been more powerful. The “Proxy Preview” report has just been published and gives the figures. For thirty years, the associations As You Saw, Si2 and Proxy Impact have been compiling this report on the resolutions proposed by shareholders of listed companies in the United States.
529 shareholder resolutions were filed in 2022 in the United States, an increase of more than 20%. A strong sign of tension.
Of these 529 resolutions, 39 were supported by shareholders, against management; also a record. This is all the more worrying because each time, these are emblematic companies. ExxonMobil saw two dissenting resolutions pass: 64.2% in favor of a proposal sponsored by BNP Paribas Asset Management calling for more transparency on climate lobbying and 56.1% in favor of the proposal of the Teamsters, the American truck drivers’ union, concerning a revision of the employee classification grid. Apple was asked to strengthen its whistleblower protection system, a request from investors that received 50.4 percent of the vote.
The atypical nature of the protest initiatives currently underway on Wall Street lies in the groups they unite: they bring together investors, public authorities, unions and NGOs in an unexpected alliance, united solely by their hostility to corporations. An unexpected phenomenon in the United States.
James McRitchie, one of the most media-friendly American activists, is asking 13 American companies to limit the pay gap between employees and managers, the equivalent of the equity ratio required by law since 2020 in France. It has already obtained 6 agreements out of 13.
Arjuna Capital is asking for more detail on gender and race pay – a subject that is unapproachable in France or the UK or in the member countries of Europe, but is addressed in Norway, for example.
The Franciscans of Perpetual Adoration, one of the most influential pension funds, is again asking Walmart to publish salaries by race, with a view to achieving greater racial equality (a resolution that was defeated last year, but received 12.7% of the vote).
Tulipshare is back at Amazon, backed by a group of several other investors. In 2022, they had called for a requirement in the bylaws to publish the respective accident rates of people of color and women, as well as a worker health and safety audit, supporting a request by the New York City Comptroller, who had previously been unsuccessful. The resolution won 44% of the vote, close to the goal. 14 other dissenting resolutions dealt with executive compensation and tax transparency. The year 2023 could be the year they win.
Another investor group is calling for strict pandemic safety protocols at Walt Disney, supporting a request from the AFL-CIO, America’s largest labor grouping.
Oxfam is asking Moderna and Pfizer to share intellectual property and technical knowledge about vaccines and Covid-19 treatments in less developed countries, where the coronavirus pandemic continues to hit hard. The NGO Shareholder Commons is doing the same at Johnson & Johnson and Pfizer.
The list is long. Most of these resolutions will probably not make it to the meeting, as companies will negotiate beforehand. In 2022, in the United States, 106 resolutions (out of 529) were withdrawn from the agenda before the meeting, the parties having reached an agreement. The practice has also developed in France. 12 investors of Totalénergies withdrew their Climate resolution, in exchange for public commitments made by the management before the meeting.
Last year in France, several groups of employee shareholders tabled resolutions on social issues at CAC 40 meetings. None of them were successful, and they have already indicated that they will put the subject back on the agenda. The debate on pensions is hardening the situation, and this spring the protesters are being reinforced by the American example.