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Apple Inc.’s bid to block an investor proposal on human rights marks the first high-profile test of new regulatory guidance calling for more board involvement in deciding whether such requests should be allowed on the corporate ballot.
A concern for human rights is already factored into the iPhone maker’s day-to-day decisions, so the shareholder request to create a board committee focused on this issue shouldn’t go to a vote at Apple’s next annual meeting, a company lawyer said in a Nov. 20 letter to the Securities and Exchange Commission. The letter incorporated feedback from Apple’s directors, who it says get regular updates on progress toward the company’s human rights goals.
Their input was included based on SEC guidance saying that boards, rather than the commission’s staff, should determine which issues are or aren’t relevant to a company’s day-to-day operations.
Apple likewise added its board’s view to earlier bids to prevent votes on three other shareholder proposals related to greenhouse gas emissions, freedom of expression, and diversity.
“I think they’ve completely misinterpreted what the SEC said,” said Sanford Lewis, an attorney representing two of the investors who have filed proposals that are being challenged. Instead of showing that issues like the environment and human rights are irrelevant, he said Apple argued the opposite: these issues are so embedded into the company’s business that they don’t need to be voted on by investors.
“It’s kind of a remarkable argument because basically they’re saying they shouldn’t have any proposals on the environment or human rights,” Lewis told Bloomberg Law.
The proposal for a new board committee came from human rights activist Jing Zhao, who in recent years has submitted a number of shareholder resolutions on this topic at companies such as Facebook Inc. and Alphabet Inc. Only about half of his proposals have made it to a vote, according to data collected by the nonprofit Sustainable Investments Institute. Those that do get a vote don’t tend to get very much support. Many of the rest were blocked from the ballot and a few were withdrawn.
Zhao couldn’t immediately be reached for comment. Apple’s associate general counsel Gene Levoff didn’t respond to a request for comment. The SEC didn’t return a request for comment.
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