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IN THE LOOP ➰ ISSUE 004
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Welcome to Spring, when flowers bloom and shareholders gather. That’s right, the season of annual general meetings—or ”AGMs” as they say in the biz—is here.

These meetings are when publicly traded companies open their books, review their past year, and plan for the year to come. They’re also ground zero for everyday investors to file shareholder proposals and impact corporate behavior. This month we’re breaking down the basics of these proposals: how they work, who can participate, and why they matter.

We’re also spotlighting major proposal headlines regarding labor rights, racial equity, and more. 

Plus, we have some news of our own ;)

Remember to smell the roses and read the fine print 🌹

In January, the SEC invited the public to comment on its current rules governing how companies disclose the relationship between executive compensation and company performance. We had some thoughts, so…

We wrote the SEC a letter:

  • Executive pay has skyrocketed – The ratio of CEO-to-worker compensation rose from 21:1 in 1965 to a whopping 351:1 in 2020. The SEC already requires companies to disclose how these huge salaries relate to company finances, but we think these rules can improve.
     
  • The SEC wants better rules (thankfully) – Current proposals would require companies to report performance measures beyond shareholder return, as well as the five measures companies deem important for determining executive pay, including which measure is most important.
     
  • We want to go even deeper – Troop proposes standardized reporting so that all companies are equally transparent and comparable, detailed longitudinal metrics that require evaluating long-term performance not just short-term gains, and DEI and sustainability benchmarks to actually enforce the fact that more sustainable and more diverse companies perform better.
     
  • You can learn more about Troop’s proposal here and read the full letter, in all its official glory, on the SEC’s website.

To our friends who want to learn more about the shareholder voting process, here’s a guide we’ve put together on the nitty gritty of proxy voting:

👤 WHO:
Anyone who directly holds at least one share of a public company is a partial owner and has the right to vote on company decisions at the AGM. Shareholders must own the share on or before a date set by the board known as the record date—generally a maximum of 60 days and a minimum of 10 days before the meeting.

❓WHAT:
The AGM is an opportunity for investors to cast votes on two general types of company resolutions, and let the company know how they’re really feeling about its current operations:

  • Resolutions proposed by shareholders usually address environmental, social, and governance issues with the company’s operations
  • Resolutions proposed by management typically cover essential operational details including compensation packages, new members on the board of directors, and company declarations
A preview of all the items that shareholders are slated to vote on is included in a document sent before the AGM, called a proxy statement.

⏰ WHEN:
AGMs take place after the last completed fiscal year has closed and the company has had time to put together presentation materials for their shareholders—usually falling around the end of May or beginning of June, AKA proxy season.

🌐 WHERE:
Most brokerages (think Robinhood, Fidelity, etc.) determine if you’re eligible based on your holdings, and send you the proxy statement in an email before the meeting. When the voting window opens, you should then receive a ballot to cast your proxy vote digitally if, like most people, you are unable to attend the AGM in person. You can find proxy statements for each individual company on the SEC’s EDGAR database.

💭 WHY:
To put it simply, proxy voting gives you a say. Paying attention not only gives you more power over your portfolio, but also allows you to demand more transparency, more accountability, more fair wages, more—you get the idea, from the companies you invest in.
Activist shareholder proposals are booming this year, led by those focused on climate and environment, according to Proxy Preview’s 2022 report. We co-sponsored the report btw 😉

Activist shareholders have already earned some wins this proxy season with (*crosses fingers*) more to come. Here are some highlights:

  • 👥 Apple and Tyson launching civil rights audits – Shareholders at Apple and Tyson approved proposals to conduct audits of how each company treats employees of color. Tyson’s move follows much controversy over how largely Black and Latino meatpacking workers were mistreated during the pandemic, while Apple’s faced criticism for failing to address the racial inequality of its workforce. Apple’s audit will also examine gender pay equity and privacy issues. As other companies prepare to vote on similar proposals, it’s worth remembering that these audits are just the start, and that real good governance comes from action.

Investors patiently waiting for more companies to kick off civil rights audits

  • 💉 Big pharma under pressure to share vaccine technology – After a failed SEC appeal, Moderna and Pfizer shareholders get to vote on proposals to study if it's feasible to share COVID-19 vaccine technology and production know-how with countries in need. Increased transparency over vaccine pricing strategy is also up for vote at both companies and Johnson & Johnson. All great examples of systems stewardship thinking: the idea that in our increasingly interconnected and vulnerable global stock market, social costs shrugged off by individual corporations still hurt the majority of investors.
     
  • ✊ Starbucks shareholders stand with unionizing workers – As labor organizing at Starbucks explodes nationwide—six locations unionized in recent months and more than 120 shops have filed for votes—a coalition of shareholders wrote a letter to the board demanding the company remain neutral. The letter came after the National Labor Relations Board accused Starbucks of firing workers for organizing. Shareholder solidarity letters are a trendy tool for defending the labor wave, not to mention shareholder value, given collective agreements have been shown to increase productivity. They also align with a surge in shareholder proposals to improve work standards, as seen in the handy chart up above.
Channeling chaotic good energy in 2022

Here’s what our team’s been snacking on this month

  • The “Racial and Gender Pay Scorecard” gave 24 companies an ‘F’ grade, including AT&T, Goldman Sachs, and Walt Disney Company. Released on Equal Pay Day (Mar. 15) by Arjuna Capital and Proxy Impact, the Scorecard examines racial and gender pay gap disclosures at 57 companies – Businesswire (~5 min, ☕️)

  • Plus, hear from Arjuna Capital co-founder Natasha Lamb how each company was graded. Lamb previously convinced Apple, Starbucks, and 19 other companies to disclose their gender pay gaps. – Bloomberg (~5 min, 📹)
🤲
“Often, women are told they need to be more aggressive negotiators, but the onus isn’t on women to change. It’s on companies to measure and report this information in a transparent and accountable way.”

Natasha Lamb, Managing Partner of Arjuna Capital
  • We’re hype about the new SEC proposed rules requiring companies to disclose climate risks and greenhouse emissions. If passed, the ruling could clamp down on corporate greenwashing, as The Atlantic’s Robinson Meyer points out – The Atlantic (~5 min, ☕️)

  • Our friends at Urvin launched a platform to help retail investors advocate for stronger regulation around fair practices in the stock markets – Urvin Finance (~∞, 💻)

  • Last month, we revisited the GameStop saga one year after the event. Since then, HBO Max has released the two-part docuseries Gaming Wall Street. Fair warning—you’ll get riled up about the outrageous criminality and lack of accountability in our financial system today. P.S. HBO Max and Hulu offer a free 7 day trial – HBO Max (~∞,💻)

  • Papa Cohen has bought $10 million more in GameStop shares this week. The burgeoning activist investor said it best himself…

Thanks again for reading. Keep the suggestions, thoughts, houseplant tips, and newsletter feedback coming at community@troop.com.

We’ll see you next month!

🦍The Troop Team 🦍

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