Shares worth more than $11.4 billion voted in favor; similar votes upcoming at Verizon and Sprint
A shareholder proposal calling upon AT&T Inc. (NYSE – T) to publicly commit to network neutrality principles on its wireless networks attracted important support in initial voting results released today at the company’s annual meeting in Salt Lake City.
The proposal, which was voted on for the first time this year, attracted at least 5.9% of the votes cast in this year’s proxy vote at AT&T, according to preliminary results released by the company. That percentage could climb higher in the final tabulation. By garnering support from more than 3 percent of voting shareholders, net neutrality will be assured a continued place on next year’s ballot. Based on the company’s recent share price, the results mean that investors holding stock worth more than $11.4 billion voted in favor of the resolution.
Similar proposals regarding wireless network neutrality are scheduled for votes at the upcoming annual meetings of Verizon Communications (NYSE – VZ) on May 3 and Sprint Nextel Corporation (NYSE – S) on May 15.
“We fully intend to continue pressing these issues which are important to shareholder and public interests, and we look forward to further dialogue with AT&T management,” said Jonas Kron, Vice President of Trillium Asset Management, LLC, who presented the proposal to AT&T shareholders, senior management and board members at the annual meeting.
“Network neutrality has significant implications for the American economy and the large institutional investors whose returns depend on its performance,” according to Laura Campos, director of shareholder activities at the Nathan Cummings Foundation. “The vote at AT&T indicates that investors are beginning to recognize the economic importance of an open and free Internet and vote their shares accordingly.”
Network neutrality is a core principle that has guided the Internet since its inception. This principle enables an open Internet by making sure that companies that provide Internet access treat all content equally—regardless of source, destination or ownership. This prevents a handful of large companies from paying wireless providers premium rates in exchange for faster speeds on their sites than others receive. Without it, consumers risk experiencing a dramatically different Internet, where large corporate sites able to pay premium costs load and operate at fast speeds while smaller newer sites struggle to function and compete with slower speeds. Numerous studies also demonstrate that network neutrality is important to the prosperity of Internet Service Providers and economic growth.
“This vote at AT&T is important because its signals to media and technology companies that investors believe network neutrality is important – comparable to social issues confronting other sectors where investors have successfully pressed for greater accountability,” said Michael Connor, Executive Director of the Open Media and Information Companies Initiative, or Open MIC (www.openmic.org), which helped formulate the shareholder resolutions.
Connor noted that the vote in favor of network neutrality principles compared very favorably to those on proposals regarding other social and environmental issues, in which companies have agreed to adopt carbon emission targets, adopt equal benefit policies for all employee families and disclose political donations. For example, a current campaign led by the Center for Political Accountability, seeking to require corporate disclosure of political spending, started in 2004 with an average 9.1% vote in favor. Since then, 100 major public corporations, including half of the S&P 100, have adopted political disclosure and accountability.
The shareholder proposals at AT&T, Verizon and Sprint were allowed on the proxy ballots following an SEC staff ruling earlier this year which denied “no-action” requests by the companies. The companies had sought to block shareholders from voting on the proposals by arguing, among other things, that network neutrality was not a “significant public policy issue.” The SEC staff rejected that argument in view of what it called “the sustained public debate over the last several years concerning net neutrality and the Internet and the increasing recognition that the issue raises significant policy considerations.”
By winning more than three percent of the vote at AT&T, the proposal reached an important qualifying threshold set by the Securities and Exchange Commission (SEC) for inclusion in next year’s proxy voting.
The proposals at AT&T and Verizon were filed by Trillium Asset Management (on behalf of its clients), the Nathan Cummings Foundation, the Benedictine Sisters of Mount St. Scholastica in Atchison, Kansas, and several individual investors including Mike D of the Beastie Boys. The proposal at Sprint was filed by the Nathan Cummings Foundation.
The proposals ask each company to publicly commit to operate its wireless broadband network “consistent with network neutrality principles – i.e., operate a neutral network with neutral routing along the company’s wireless infrastructure such that the company does not privilege, degrade or prioritize any packet transmitted over its wireless infrastructure based on its source, ownership or destination.”