Proponents with a conservative political bent had focused on social issues for many years, but since 2019 they have branched out to push for ideological diversity on board and (new this year) to question the BRT statement of purpose (top graph). The proponents support untrammeled capitalism and more proposals usually get omitted than go to votes. Support from investors at large has been limited except for proposals that borrow the resolved clause from the main political spending and lobbying campaigns.
The National Center for Public Policy Research (NCPPR), a Washington, D.C.-based think tank, is the main player, with resolutions also filed by its principals and like-minded supporters. NCPPR calls itself “the nation’s preeminent free-market activist group focusing on shareholder activism and the confluence of big government and big business.” Its representatives also attend annual meetings without filing proposals. Recently NCPPR’s Free Enterprise Project has been warning about the dangers of “woke capitalism.” It asserts Black Lives Matter leaders are “self-declared Marxists who seek a new national order,” and reserves particular ire for the “hard-left agenda” of BlackRock CEO Larry Fink.
BRT statement of purpose: NCPPR has asked seven companies to
prepare a report based on a review of the BRT Statement of the Purpose of a Corporation, signed by our Chief Executive Officer, and provide the board’s perspective regarding whether and how our Company’s governance and management systems can or must be altered to fully implement the Statement of Purpose, and what our Company should do if the Statement cannot be reconciled with current practices and commitments. The report may include the Board’s perspective on benefits and drawbacks of the options considered, as well as the Board’s recommendations.
The SEC has agreed with contentions from Apple and AT&T that the proposal is moot. Because Amazon.com, Duke Energy, Johnson & Johnson, JPMorgan Chase, Salesforce.com and Target all are arguing the same thing, with some also saying it also is an ordinary business matter, it is unclear if there will be any votes.
Charitable giving: An effort from NCPPR to have companies report more about their charitable giving programs appears to be fizzling. Conservative proponents have long questioned corporate programs that benefit Planned Parenthood, on the grounds this supports abortion. But the SEC has routinely held that issue-specific charitable giving resolutions are ordinary business. This year, the proposal asked six companies to provide annual reports “analyzing charitable contributions,” identifying the recipients of any donation of more than $500, explaining how the money was spent and any restrictions put on its use. It also calls for “evaluation of the efficacy of the donation and the Company’s intention with regard to future donations to the organization,” a board analysis of related risks to the company and how these have been determined, and identification of “philanthropic areas or initiatives considered most germane to corporate values while posing less risk to Company reputation; or in the alternative, any decision to scale back without replacement risky or misused donations.”
The proposal has been omitted on ordinary business grounds at AT&T, McDonald’s, Starbucks and Walt Disney and faces challenges on the same grounds that seem likely to succeed at Facebook and Netflix.
Board diversity: In 2018, NCPPR began copying board diversity resolutions initially filed by the New York City Comptroller’s Office which altered that request to call for companies to seek out “ideological diversity” on the board, with information presented in a chart. The proposal’s arguments parallel those expressed by supporters of greater gender, racial and ethnic diversity, but says “ideological diversity” is missing in Corporate America. A lack of “diversity of thought” means that companies “operate in ideological hegemony that eschews conservative people, thoughts, and values,” according to NCPPR.
The proposal has been omitted for procedural reason at the New York Times and at Verizon Communications because the SEC agreed it was moot given current board nominee procedures. It is still pending at Discovery, where the resolution missed its resubmission threshold in 2019 when it earned only 1.7 percent support, and at Progressive, which says it is moot. Votes in both cases seem unlikely.
Diversity: Proponents have been arguing for three years that employees with conservative viewpoints face discrimination at work. This year, NCPPR wants a report from American Express “detailing the potential risks associated with omitting “viewpoint” and “ideology” from its written equal employment opportunity (EEO) policy.” This proposal has been omitted on ordinary business grounds at Walgreens Boots Alliance and American Express is making the same argument against it at the SEC.
An individual shareholder has been asking Intel for three years, arguing the company’s practice to display the gay pride flag disparages those who do not support LGBTQ rights. Each iteration of the proposal has been omitted on ordinary business grounds and that outcome seems certain this year, as well. The proposal asks “that Intel refrain from publicly displaying the pride flag.”
Other issues: An individual wants Amazon.com to allow customers to filter their purchase by country of origin, but a procedural challenge seems likely to succeed.
Another individual wants Walmart to reinstitute a “buy American” policy for its products and curtail purchases “from China and other foreign countries,” to less than half its total purchases by June 2022. It reasons, “This policy does not apply to Walmart stores in other countries, but it does encourage the export of as many American products as possible to be sold in Walmart locations in other countries.”
Finally, a longtime critic of corporate environmental protection, wants Exelon to “report to shareholders on the extent to which its business plans with respect to electric vehicles and their charging stations may involve, rely or depend on child labor outside the United States.” The proponent says the company “hopes to profit from” charging electric vehicles, but says this plan could be undercut by problems with child labor in the supply chain for cobalt, a key component of vehicle batteries. Exelon has challenged the proposal at the SEC, arguing it concerns ordinary business.
