Before shareholders vote on the proposal, the board of directors can make a recommendation - is this a good idea or a bad idea? In this case, they say: bad idea.
Shareholders aren't bound to agree with the board, but usually do - after all, they're the same folks who nominated the board in the first place.
Yes, this sort of thing happens all the time. If you own some shares of an individual company (not through a fund), you'll get notice periodically of items to be voted on: proposals from the board (often routine such as handling accounting and audits), which the board recommends passing and which almost always pass, and proposals from individual shareholders, which the board almost always recommends against and which almost always fail. Many of them are ideological, some more reasonable than others.
Does anyone know of any prominent case where a major company passed a shareholder proposal? And/or the board recommended in favor of one?
I think it's because the overwhelming number of shareholders in US equities want returns, not a new governance responsibility.
Workers at the companies, however, tend to want the governance, and should have it.
In this case, I don't think that's what's going on. Most of the shareholder proposals I've seen are basically idiosyncratic political soapboxing, and I vote my tiny number of shares against them because I don't agree with either the proposal or the venue or just don't care.
If I ever saw one that seemed pertinent, I'd vote for it. However, the shares I own outside of mutual funds are tiny and insignificant, so it's moot anyway.
And partly it's a self-fulfilling prophecy: if you disagreed strongly with the board, you'd be less likely to hold stock in the company in the first place, unless you're in the rare position of owning enough of it to affect decision-making.
In my experience, the people with enough savvy to get a shareholder proposal passed for an individual company will instead field their own candidates for the board.
When competent shareholder proposals are presented, they usually are done across a swath of the market and have to do with corporate governance. Managers of major market players (e.g. pension funds) will decide they want a certain change and then present it to many companies.
As an example, board declassification proposals passed at over 50 companies in the first half of this decade; note some of these were supported by the board or at least not opposed: http://www.srp.law.harvard.edu/companies-voting-on-proposals...
Boardseats are usually handed out to representatives of large blocks of stock so there may be a set of people who are savvy enough but do not have enough stock to propose board candidates, or if they do propose them will likely not have a whole lot of chance of seeing their candidates make it to the board.
Probably roughly equal to how much chance their proposals have of passing in the first place but still, such people can and probably do exist.
Why should that make it any less serious than a proposal that is motivated by pure financial interest? There is no law that says monetary profit is the only good a company can create. I object your dismissal of it as non-serious just because it's not obviously commercial.
"Meaningful support" and "meaningful chance of passing", of course, has nothing to do with morality, goodness, or any other such thing. I'm in a fact mode here, not a normative mode; that comes after facts.