Between The Lines #7: What is a Withdrawal for Commitment?

Recent Proxy Season Takeaways

  • What is a Proxy Vote? Voting by proxy is when shareholders get a chance to tell the companies in which they are invested which proposals they are for and against. Learn more here.

Gun Policy 

After years of pressuring one of the two publicly held gun manufacturing companies, Sturm Ruger, Civex Advocate Partner, ICCR, as well as its member organization CommonSpirit Health, successfully presented a proposal at the June 1st meeting. Majority of the shareholders voted for the company to hire an outside consultant to study the “human rights” impact of the guns it sells (Read more here). 

Corporate Governance 

On July 27th, Rite Aid will face a proposal to change shareholder voting power from needing a Super Majority to a Simple Majority Vote instead. This will require less shareholders needed for each voting item within the company charter and bylaws and will transfer some decision-making power from the board to the owners of the company. The hope is this will increase corporate governance accountability since shareholder vote turnout is still low, yet those investors that vote have the company’s best interests in mind. 

Environmental Deforestation

Home Depot, one of the nation’s major purchasers of wood products, was confronted by its shareholders regarding deforestation and forest degradation. Green Century Capital Management proposed that the company issue a report assessing if and how it could increase the scale, pace, and rigor of its efforts to eliminate deforestation and the degradation of primary forests in its supply chains. 64.6% of Home Depot shareholders supported this report which will include avoiding all primary forests and regions at high risk for deforestation and degradation.

Another Avenue for Change 

Besides majority vote successes, there are other ways shareholders and advocates can count their wins. A Withdrawal for Commitment refers to proposals that are withdrawn by the proponents after a company commits to taking the action asked within the resolution. These are seen as successes since it signals achievement through productive engagement with management. The next few months will be telling for these withdrawn proposals as Civex monitors whether the companies follow through with their commitments.

An example of a withdrawal success involves Civex Advocate Partner IASJ who submitted a proposal to Dow Inc for a Racial Equity Audit. The company decided to collaborate with IASJ to commission a racial equity audit that will be conducted by a team from Covington & Burling LLP, a law firm supported by both organizations that has experience working with other leading companies on civil rights and equity audits.