Shareholders Press American Express for Transparency on Privacy and Data Security

American Express shareholders expressed strong support for a consumer privacy proposal filed by sustainable wealth manager, Arjuna Capital in collaboration with open media advocate Open MIC. The proposal was supported by over 21% of shareholders at the company’s annual meeting held Monday in New York, representing a high historic vote on a social issue.

This shareholder proposal represents the first of its kind requesting a “transparency report” that has gone to a vote of shareholders.  Specifically, the proposal asked the Board of Directors of American Express (NYSE:AXP) to publish a report on consumer privacy, data security, and government requests for customer information. 

Arjuna Capital noted in a letter to shareholders that an American Express competitor, MasterCard, has responded proactively to shareholder concerns by issuing a “Privacy & Data Protection” report, joining leading consumer-facing Internet companies (including Google, Facebook, Microsoft, Yahoo!, Twitter and LinkedIn) as well as leading U.S. telecommunications carriers (AT&T and Verizon), who now regularly publish “transparency reports” detailing government and law enforcement requests for confidential customer data. 

Arjuna Capital was the lead filer of four shareholder proposals this year asking companies to improve privacy and data security oversight and transparency.  After engagements with MasterCard (NYSE: MA), UnitedHealth Group (NYSE: UNH), and electronic medical record company Cerner (NASDAQ: CERN), Arjuna Capital withdrew the proposals when the companies agreed to alter their board committee charters to ensure board oversight of the issues.  Arjuna Capital also co-filed a proposal asking AT&T (NYSE: T) to publish a transparency report, which was withdrawn in February after the company agreed to report.      

“Privacy and data security are critical business and social issues,” said Natasha Lamb, Arjuna Capital’s Director of Equity Research and Shareholder Engagement. “As one of the world’s largest gatekeepers of consumer financial information, American Express has a duty to provide investors and customers with a new level of transparency.  Emerging best practice is publishing a Transparency Report.”

The shareholder proposal cited a Wall Street Journal report that the U.S. National Security Agency has obtained customer data from credit card issuers.  Similarly, Businessweek has reported that an NSA program, “Follow the Money,” tracks records of international payments and credit-card transactions.

“We are living in the age of Big Data, where privacy rights are threatened each time citizens participate in the digital economy.  Transparency is critical to ensure it does not become the age of Big Brother,” said Lamb.

The proposal was presented at the American Express annual meeting in New York by Michael Connor, Executive Director of Open MIC, a non-profit organization that works with shareholders on media issues. 

“Customer trust is critical for any business, but especially for companies that gather personal data concerning and affecting the lives of millions of people around the world,” said Connor. “It’s important for everyone to know how threats to privacy and data security are being managed.”