Author(s): Timothy L. McCoy
Companies must make decisions that benefit the company and its direct stakeholders. Corporate social responsibility initiatives have emphasized that management is also expected to make socially responsible decisions that affect indirect stakeholders. Both management and shareholders help fulfill these obligations by creating proxy proposals intended to address needs of all stakeholders. Proxy proposals are regulated by the Securities and Exchange Commission which created rule 14a-8 that specifies the requirements to submit a proposal (Kajunski & Liebnick, 2021). The purpose of a proxy statement is to provide enough information for shareholders to understand the proposal and decide their vote thoughtfully and fairly at the annual meeting. In this paper, management and shareholder proposals are analyzed with respect to the number and nature of the proposals as well as voting results on these proposals during the annual shareholders’ meeting. What are the topics of these proposals? What voting recommendations do management provide for these proposals? What are the voting results in relation to management’s recommendations? This study investigates the voting results for two sectors of Fortune’s 250 largest companies over a three-year period. The energy and technology sectors are targeted in this study for several reasons. Consumers cannot avoid using energy or technology products and maintain a daily reliance on them. These sectors include some of the largest public companies. The social responsibility reputation of both sectors has frequently been in the news due to environmental issues related to energy and privacy issues related to technology. The energy sector contains the highest number of 2022 Fortune 250 companies (29) followed closely by the technology sector at 28 companies, creating a balanced pool of companies for comparison. The total number of management proposals and shareholder proposals for the energy sector slightly exceeded the number for technology companies. The individual years’ totals track a similar pattern and indicate both sectors experienced an increasing number of management and shareholder proposals over the three years. Notably, all management proposals related to governance matters. Management predictably recommended that shareholders vote in favor of all its proposals for all years. On the other hand, management almost always recommended against shareholder proposals. Shareholder proposals in both sectors were predominantly related to social responsibility matters. The technology shareholders were more active in socially related proposals. Despite management’s opposition to social responsibility related proposals, both sectors’ shareholders were able to get some passed. Even though slightly less active in social responsibility related proposals, shareholders in the energy sector were more effective than their counterparts in the technology sector in getting them passed.