Every year, publicly traded companies hold annual meetings at which management presents a summary of the year’s accomplishments and shareholders vote on a slate of ballot issues, referred to as “proxy resolutions,” that are placed there by either management or shareholders. As in public life, in theory this form of corporate governance relies on a division of authority and checks and balances among shareholders, the board of directors, and company management. In theory, shareholders function much like registered voters, boards serve as their elected representatives, and management operates much like the executive branch to carry out the mandates accorded to it. Management is, in theory, accountable to shareholders, and their duly elected representatives on director boards. In practice, however, management authority holds sway, and corporate directors are typically nominated and accountable more to a CEO than to shareholders. Moreover, votes on proxy resolutions are nonbinding. Nevertheless, they serve as an important check on corporate power, and they need to be understood more widely by a concerned public that is affected by the impact of corporate decisions. One could argue persuasively that taxpayers, as underwriters of the investment portfolios—which include publicly-traded equities—are in a position to voice their views on the array of social, environmental, economic, and governance proxy resolutions that are filed each year for consideration at annual meetings. This article examines a shareholder resolution that was filed by the AFL-CIO with Amazon and voted on this past May. The proxy resolution concerned the use of criminal background checks for employees, which has a disproportionate impact on African Americans at a time when entry level jobs are disappearing, and wealth and income gaps have widened considerably. Commissioned by the Sustainable Investments Institute, it was circulated to Si2’s subscriber base, which includes major institutional investors, as a guide to their deliberations over how best to vote their proxies. The analysis makes no recommendations. It does analyze the shareholder campaign and presents the pros and cons of the resolution, all against a backdrop of (1) tectonic shifts affecting the U.S. economy, particularly concerning the nature of work, and (2) the bipartisan push for criminal justice reform, which has generated changes in sentencing and prison policies.



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