More than a decade ago, institutional investors, notably labor unions and pension plans, began using shareholder proposals as a vehicle for advancing progressive social causes. These proposals have recently garnered heightened levels of shareholder support. While even majority support for a proposal does not insure its adoption by the board of directors, appreciable (even if not majority) support can nonetheless sometimes precipitate adoption, or at least negotiation (which can lead to adoption). This Essay argues, first, that with Congress now largely dysfunctional, social proposals have acquired a whole new role—that of a company-by-company, fall-back mechanism for solving social problems that Congress has failed to address. Second, a new dynamic may be just over the horizon. Once the legal community becomes fully cognizant of the successes of social proposals, it is probably only a matter of time before wealthy conservative activists identify the proposals as a mechanism that they may be able to co-opt. When that happens, boardrooms will, as never before, become important battlegrounds in the culture wars.
Margaret V. Sachs,
Social Proposals Under Rule 14a-8: A Fall-Back Remedy in an Era of Congressional Inaction
Available at: http://digitalcommons.law.uga.edu/fac_artchop/883