Apple had already engaged with investors as a result of shareholder campaigning to improve proxy access and adopted changes to it existing rules. These mean that shareholder nominations can be accepted as long as investors hold at least 3% of company shares and up to 20 shareholder can group together to reach this 3% threshold. Shareholders need to have held those shares for three years or more. Apple has also agreed that shareholders can submit nominees consisting of up to 20% of its board.
However, these rules are not viewed as sufficient by some investors. Apple responded that the proposal put forward by James McRitchie, editor of the Corporate Governance website, had been made unnecessary by the changes it had already made and that it had adopted proxy access provisions that protect Apple, best serve the interests of its shareholders, and were consistent with market practice and other Fortune 500 companies. Apple added that its bylaws also kept directors accountable to shareholders by providing for an automatic end to the term for any director that fails to be elected by an affirmative vote of a majority of the shares represented and voting in an uncontested election.
McRitchie, meanwhile, has dubbed Apple’s changes as ‘proxy access lite’ – because of the restrictions placed on the number of shareholders that can group together to meet the 3% threshold and also restrictions on when someone can be renominated in a following year. Also he has suggested that in reality 20% of a board would actually one mean one director nomination for a board of eight. Manifest notes in its analysis that the Council of Institutional Investors recommends that shareholders should be able to hold shares for two years before they can nominate directors.
Other shareholder resolutions put forward at the meeting were a request for the company’s board to issue a report providing policy options for the company to reach a net-zero greenhouse gas emission status for its facilities and major suppliers by 2030; a request that the board adopt an accelerated recruitment policy requiring Apple to increase the diversity of senior management and its board of directors and one issued by the US conservative think tank, the National Center for Public Policy Research requiring Apple’s management to prepare a report identifying Apple’s criteria for operating in regions with significant human rights violations.
Apple advised that investors should vote against all the proposed shareholder resolutions. In its SEC filing prior to the meeting the company detailed information as to how it was tackling environmental and human rights challenges as well as being active at promoting diversity among its employees. In its report prior to the meeting Manifest suggested that shareholders could hold the view that the company has made progress in reducing its carbon footprint for its direct operations and promising steps are being taken to replicate this for the supply chain process. Manifest’s analysis noted that when compared to other major indices, the company’s percentage of women at executive level falls significantly short of common practise, however, at the board level; the company representation of women is slightly higher. However, there seems to be no representation of minority groups. Manifest did not believe the proposal by the National Center for Public Policy Research would benefit shareholders and that investors may believe that Apple is in the best position to analyse its investment opportunities.