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Comment by ath0 | Hacker News Reader

Shareholders are allowed to propose items that will appear on the ballot for annual vote, "(1) In order to be eligible to submit a proposal, you must have continuously held at least $2,000 in market value, or 1%, of the company's securities entitled to be voted on the proposal at the meeting for at least one year by the date you submit the proposal." https://www.law.cornell.edu/cfr/text/17/240.14a-8

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.

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So, "some person" of no particular power within Twitter (given how easy it is to own $2K of Twitter stock for a year) got a ballot proposal on the ballot for what could be read as more-or-less personal/ideological reasons as much as a serious proposal? In which case, this sort of thing happens all the time and this is only HN news because it's Twitter? (Checking my guess/understanding. And I'm not upset that it's HN news or something, that's fine; just trying to calibrate my understanding, as my initial calibration was perhaps too oversensitive.)

> In which case, this sort of thing happens all the time and this is only HN news because it's Twitter?

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 have no idea if this is relevant, but it seems like it: http://www.srp.law.harvard.edu/companies-voting-on-proposals...

I don't understand why American shareholders are so quiescent and trusting of their boards. I can't help noticing that the people who idolize corporate boards are often the same people who fulminate against representative government.

>I don't understand why American shareholders are so quiescent and trusting of their boards.

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.

> I don't understand why American shareholders are so quiescent and trusting of their boards.

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.

Because the minority shareholders who don't trust their boards usually just sell their shares and invest elsewhere. When enough shareholders do that it tends to drive the stock price down and then the Board has to act, or else they tend to get ousted by corporate raiders.

Most Americans hold shares indirectly through funds where they lose all governance rights. The fund managers have zero interest in any proposal which has the faintest whiff of risk.

Most shares are owned by funds, often stable funds that don't want to rock the boat, whose shareholders don't particularly care about individual companies. Most individuals don't tend to own enough stock in a company to matter.

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.

> Does anyone know of any prominent case where a major company passed a shareholder proposal? And/or the board recommended in favor of one?

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...

> 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.

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.

what could be read as more-or-less personal/ideological reasons as much as a serious proposal

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.

I think "serious" here means "expected to have any chance of being accepted."

A reasonable question. In this case by "serious" I mean a proposal with a significant body of support behind it. If the bar is "own $2K of stock for a year" to get a proposal made then it is very easy for, as I said, "some person" to get a proposal on there that has no meaningful support and no meaningful chance of passing. It doesn't mean it was done by someone who holds exactly $2K of stock for one year of course, but at the scale of twitter even $500million of stock would put them very distinctly in the minority.

"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.

OK from that point of view I agree with you. Sorry for misinterpreting your original comment.

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