In Proxy Voting, Shareholders Consider AI, Pay Gaps, Farm Animal Treatment, and Anti-ESG

Proxy season—the annual custom in which companies mail out their proxy documents and investors vote on management pay and an array of shareholder proposals—has started. You can read a primer about proxy voting here and your rights as a shareholder here.

A company’s annual general meeting marks the end of its proxy season. These meetings are held throughout the year, but informally, what’s known as proxy season runs between the Apple AAPL annual meeting, which took place on Feb. 28, 2024, and the Alphabet GOOGL meeting, which is set to happen in June.

We’ll report on key recent and upcoming votes during proxy season, based on research from Morningstar Sustainalytics, which also offers advice on proxy voting. We’ll also report on themes that arise during the season.

Review: Last Month in Proxy Season

Apple faced five shareholder proposals on its proxy ballot ahead of its annual meeting on Feb. 28. The company recommended investors vote against all five. (You can find the details of the Apple proposals here.)

• Artificial intelligence. AFL-CIO Equity Index Funds asked Apple to prepare a transparency report on its use of artificial intelligence in its business operations and disclose its ethical guidelines regarding the use of AI. The resolution was supported by 36% of Apple shareholders, according to Morningstar Sustainalytics.
• Race and gender pay gaps. Anmol Mehra, represented by Arjuna Capital, asked Apple to report on median pay gaps across race and gender, “including associated policy, reputational, competitive, and operational risks.” This resolution received 31% support.
• Proposals from anti-ESG groups. Over the past few years, so-called anti-ESG resolutions have been offered by a variety of proponents who reject the aims of shareholder proposals related to environmental, social, and governance-focused issues, often criticizing them as being “woke.” Morningstar has broadly characterized these resolutions as anti-ESG while recognizing that they are varied and often use language that is similar to those of traditional ESG proposals.
  • One resolution, from the National Center for Public Policy Research, asked Apple to report on potential risks associated with omitting the words “viewpoint” and “ideology” from its written equal employment opportunity policy. Another, from the American Family Association, asked Apple to evaluate the standards and procedures it uses to curate app content and how Apple manages disputes between government interests and user rights. A third, from the National Legal and Policy Center, asked Apple to report on the congruency of its privacy and human rights policy positions, especially in war zones and under oppressive regimes. The proposals received between 1.3% and 1.8% support, according to Morningstar Sustainalytics.

Ingles Markets IMKTA faced two proposals from undisclosed shareholders at its Feb. 13 annual meeting. Management said that Ingles Chairman Robert Ingle II held 72% of the voting power and intended to vote against the proposals. You can read the supermarket operator’s proxy here.

• Treatment of farm animals. Ingles was asked to disclose what percentage of its in-shell and liquid eggs come from cage-free animals and the specific steps the company is taking to implement its cage-free goal in 2025. Approximately 5% of shareholders supported the proposal. But adjusted for Robert Ingle’s holding, it is estimated to have won 49% of the non-inside-shareholder vote.
• Changing customer taste. The proposal asked Ingles to report on how it is overseeing risks related to “changing customer expectations on significant environmental and social policy matters.” Some 6% of shareholders supported it, or 51% of the vote on an adjusted basis.

Morningstar Sustainalytics analyst Andrew Spurr wrote, “Stripping out [Robert Ingle’s] voting power, these proposals received very high levels of independent shareholder support, with one proposal receiving majority independent support and one very close to majority. These are proposals that would not typically get very high levels of support, unlike climate proposals, for example.”

Deere’s DE Feb. 28 annual meeting was notable for two shareholder proposals from anti-ESG advocates, write Morningstar Sustainalytics analysts Spurr and Ignacio Garcia Giner. Deere recommended that shareholders vote against both proposals. You can read the heavy-machinery company’s proxy here.

• The National Legal and Policy Center asked Deere to report on the congruency of its policies “in support of greenhouse gas reduction and renewable energy use, with those priorities’ effects on the ongoing viability of the industries that constitute the vast majority of the company’s revenue base.” The proposal was supported by 1.5% of shareholders.
• The National Center for Public Policy Research asked Deere to audit “the impacts of the company’s diversity, equity, and inclusion policies on civil rights, nondiscrimination and return to merit, and the impacts of those issues on the company’s business.” It was supported by 1.1% of shareholders.

Preview: This Week in Proxy Season

Applied Materials AMAT will face two shareholder proposals at its meeting on March 7, notably one on the race and gender pay gap. Arjuna Capital, on behalf of Ronald Strom and Catherine Pascal, asks the chip equipment fabrication company to disclose “quantitative median and adjusted pay gaps across race and gender, including associated policy, reputational, competitive, and operational risks, and risks related to recruiting and retaining diverse talent.” You can read the Applied Materials proxy here.

The company recommends voting against the proposal. Morningstar Sustainalytics recommends shareholders support it.

Such proposals received “strong support in 2023, with two majority-supported resolutions in the second half of 2023 from Oracle ORCL and Nike NKE,” writes Giner. In addition, the pay-gap reporting proposal on Apple’s ballot won 31% of the vote. Currently, Giner adds, Applied Materials has no female named executive officers, based on its most recent proxy disclosures.