American companies spend millions on lobbying and lobbying-related activities each year. That covers both direct lobbying, which is direct communication with a member of a legislative body, and grassroots lobbying, which is money paid to influence the public and their likelihood of contacting their representatives. Through trade associations and memberships to Chambers of Commerce, an individual company’s lobbying spend can reach millions yearly.
In these votes, shareholders are asking companies to be transparent about to whom they make lobbying payments and how they reach decisions on those payments.
There are plenty of ways for corporations to influence the civic sphere in America. In addition to lobbying, companies can contribute to political campaigns, either directly or through secretive “dark money” super PACs or non-profit contributions. OpenSecrets does the hard work of tracking public donations, but dark money leaves a lot of questions.
In these votes, shareholders are asking companies to be transparents about to whom they make political contributions and how they reach decisions on those contributions.
Corporate Governance and Proxy Access
At some companies, different shareholders have different rights. One well-known example is Alphabet, Google’s parent company. Executives at Google created three classes of shares: class A, which get one vote per share, class C, which get no votes per share, and class B, which is restricted to directors and get 10 votes per share. While investors can choose to buy class A or class C, they can’t buy class B. At other companies, shares with higher voting rights aren’t available at all for investors. This creates unequal footing for shareholders who want to have a positive impact on the company.
Shareholders at Ford are asking that the shares allocated to Ford family members, which get 36 votes per share, are reduced to equal the one vote per share allotted to everyone else.
Shareholders at UPS are asking that the shares allocated to UPS employees and their family members, which get 10 votes per share, are reduced to equal the one vote per share allotted to everyone else.
Executive compensation (as decided by a board of directors) is based on a variety of factors that differ from company to company. Shareholders at some companies want their boards to incorporate specific metrics and milestones into their decisions on executive compensation. Note that these shareholder resolutions ask not for the board to take this action but to research and create a report on the impacts of taking these actions.
Companies embroiled in recent scandals over the sometimes sky-high prices of prescription drugs have seen shareholder prices and reputation suffer. As a result, shareholders at Eli Lilly are asking the companies to investigate drug pricing as a possible metric for executive compensation.
Specialized Director Nominations
The makeup of the board of directors is different at every company. Board seats are often allocated to internal nominations and shareholder nominations, but more rigorous criteria can also be applied to nominations. For example, some forward-thinking companies ensure that a certain number of women or minorities are nominated. At Motorola, a company with a complex global supply chain, shareholders are requesting that when board seats become open, at least one candidate who has human rights expertise is nominated.
Greenhouse gas emissions are a serious obstacle to our global future. Research has shown that corporations are responsible for a large majority of greenhouse gas emissions, which means that they are the key to reducing them. While many countries came together at the Paris Climate Conference to promise to reduce carbon emissions, companies have been slow to fall in line.
Shareholders at Kinder Morgan, a major builder of oil pipelines, are requesting the following:
- A report on the company’s policies to monitor and reduce greenhouse gas emissions
- An annual sustainability report focusing on ESG related issues (environmental, social and corporate governance)
- A report on how the company, its holdings and its performance will be impacted by a transition to a low-carbon future consistent with the Paris Agreement
Studies show that women have tremendous potential to boost the national and global economy – if given the chance. However, too many women are underpaid, kept out of management positions, and pigeonholed into ‘women’s work’ (often low-paying, at least until men move in.) But companies can take action to protect and encourage female employees, and more and more, shareholders are demanding that they do so.
Shareholders at Express Scripts want the company to report annually on whether there is an identifiable gender pay gap among its employees.
Shareholders at Charles Schwab want the company to disclose the results of its annual EEO-1 report, which shows gender and race distribution by job.
Human and Animal Rights
As a technology company with a variety of products, Motorola has a long and complex supply chain that stretches all over the world. Forced and coerced labor are common in factory work, especially in the third world, as well as devastating conditions for workers. Shareholders at Motorola are requesting that the company report annually on its efforts to ensure its supply chain is free of forced labor, and what steps it takes to ameliorate worker conditions and compensate affected workers.
Test Animal Protections
Eli Lilly, a pharmaceutical company, tests a variety of products and medicines on animals before moving on to human testing. It does some of that work in house and contracts some of the test work to third party companies. While the company has internal policies for animal treatment and protection, shareholders are requesting that Eli Lilly strengthen those policies for outsourced laboratories.