Activist shareholders earned key wins in two transparency-focused shareholder proposals at Twitter Inc. this week while suffering setbacks with similar proposals at Meta Platforms Inc. and Amazon.com Inc.
Twitter shareholders voted 51.1% in favor of a proposal that could mark the end of using arbitration agreements and nondisclosure agreements to settle disputes between an employer and employee. The Twitter vote followed a successful campaign against Apple Inc., which conceded that employees who sign concealment clauses are free to discuss assault, discrimination, harassment or retaliation they experience at work. Alphabet Inc. said in its proxy statement that its employees were also free to do so, but a shareholder proposal regarding the use of concealment clauses and the rights of employees to speak remains on the ballot ahead of the company's June 1 shareholder meeting.
Tailwinds from similar efforts winning out at International Business Machines Corp. and Salesforce Inc., among others, are a signal that shareholders are demanding reform, said Meredith Benton, founder of Whistle Stop Capital.
"I think we're seeing the end of the use of arbitration and NDAs in tech," Benton said. "Some outliers will probably dig their heels in, but as a standard practice, I think it's done."
Twitter declined to comment.
The other Twitter shareholder proposal that passed will require the company to report its policies and procedures for making campaign contributions to candidates running for political office. Benton sees the vote as part of a broader trend of investors seeking more transparency from board members and company leaders.
"A majority of Twitter shareholders supported the NYS Pension Fund's proposal to shine more light on the company's political spending," New York State Comptroller Thomas DiNapoli said in an email to S&P Global Market Intelligence. "Corporate accountability is a priority for the fund, and it's time for Twitter's board to step up and deliver transparency on spending for political causes."
A separate shareholder measure that would have required a report on the company's lobbying activities and expenditures was rejected by a majority of voters.
The acquisition of Twitter by Elon Musk is likely to produce sweeping changes that will affect even the shareholder proposals that received a majority share of votes, CFRA Research's Angelo Zino said. In April, Musk agreed to acquire Twitter in a transaction valued at $44 billion.
"There's a lot [of proposals] that may not have staying power," Zino said.
Twitter founder Jack Dorsey stepped down from Twitter's board May 25, and Peter Thiel, an early investor in Facebook, exited Meta's board, each after announcing their planned departures months in advance.
Twitter shareholders reelected Patrick Pichette of Inovia Capital to the company's board, while Silver Lake's Egon Durban did not receive a majority of votes cast and submitted his resignation.
The Twitter board wrote in a May 27 SEC filing that Durban's resignation was not in the best interest of the company and thus had not been accepted. But like the shareholder proposals on the docket, the composition of the company's board and its C-suite leadership is likely to change under the direction of Musk, Zino said.
Benton said she is still bullish toward shareholders' ability to have productive dialogues with companies to collaborate and institute the reforms shareholders want.
"The question going forward is how often will we need to file resolutions versus how often are we going to be able to discuss these topics with companies successfully," Benton said.
Facilitating change at other Big Tech companies has been more difficult, in part due to the corporate governance structure at Meta, which grants CEO Mark Zuckerberg a majority of voting shares.
"I think the structure has actually been quite detrimental here," said Natasha Lamb, director of equity research and shareholder engagement at Arjuna Capital. "So much frustration from investors has not been addressed. It's very difficult to create change at Facebook."
None of the 15 resolutions shareholders presented to the board of Amazon nor the 15 presented to Meta's board gained enough votes for the proposals to be considered for adoption. Meta and Amazon shareholders also introduced a proposal that would request the respective boards of both companies to prepare a report regarding the risks associated with the use of concealment clauses.
An Arjuna proposal requested a third-party assessment of the risks of psychological, civil and human rights harms to users of the metaverse in order to justify spending $10 billion annually on the project, Lamb said. Meta had sought to exclude the proposal from its meeting ballot, but the SEC ruled in April that Meta had to give investors the opportunity to hold a vote over their concerns.
Earlier this month, corporate accountability group SumOfUs released a report documenting sexual harassment and assault, gun violence and homophobic slurs on Meta's virtual reality platform, Horizon Worlds.
Meta did not respond to a request for comment.
"We are already working with numerous researchers, experts, and advocates around the globe to better understand potential risks and mitigations, which is informing how we design the products and experiences that are just being built," Meta said in its proxy filing, urging shareholders to vote against the proposal.
The challenges Twitter and Facebook have had with content moderation is what drove Arjuna to file a proposal to add a human and civil rights expert to the boards of both companies, Lamb said.
"It's like a game of Whac-a-Mole," Lamb said. "We're thinking of these issues being root-cause issues, rather than just constantly trying to monitor a platform that is creating these negative externalities."
