FOR IMMEDIATE RELEASE
At Meta’s annual meeting last week, a majority of independent shareholders (53.6%), representing $635 billion in market cap, voted in favor of a proposition demanding more disclosure of the costs and risks associated with the development and deployment of generative AI products. Meta has a dual-class share system in which independent shareholders get only one vote per share, while company insiders own shares that entitles them to 10 times the voting power per share. Alphabet shareholders will vote on a similar resolution this Friday.
Proposal 6 on the ballot asked the company to issue an annual report within a year of the meeting “assessing the risks to the company’s operations and finances, and to public welfare, presented by the Company’s role in facilitating misinformation and disinformation disseminated or generated via generative Artificial Intelligence; what steps the Company plans to take to remediate those harms; and how it will measure the effectiveness of such efforts.”
Co-filed by Arjuna Capital, Open MIC, and Ekō, the resolutions are notable for asking that the companies establish metrics and measure their efforts to safely deploy AI to demonstrate that they are living up to the commitments they make. “As long-term shareholders, we want Meta and Alphabet to succeed over the long-run,” said Natasha Lamb, Chief Investment Officer at Arjuna Capital. “Which means our companies must do what they can today to mitigate the generative-AI risks of tomorrow.”
While the Company urged a vote against the proposal, influential proxy advisor Institutional Shareholder Services (ISS) recommended that shareholders support Proposal 6, which independent shareholders did. Because of the company’s dual-class share structure, which weights the value of votes by insiders, like Mark Zuckerberg, at ten times the value of ordinary shares, the non-binding resolution did not pass. (When factoring in votes by company insiders, the proposition earned 16.7% of the vote.) Nevertheless, the strong minority support sends a strong signal that the company must do more to retain the trust of investors as it invests tens of billions of dollars in AI to compete with its rivals. In all, five proposals earned a majority of the independent vote.
Notably, independent shareholders voted by a wide margin on Proposal 5, which called for sunsetting dual-class shares at the company, to give non-insiders equal voting power. In its guidance, ISS mentions Meta’s multi-class share structure “with disparate voting rights that is not subject to a reasonable time-based sunset.” Both Meta and Alphabet maintain dual-class shares that severely undermine common shareholders’ ability to exert influence, owing to the diluted value of their votes compared to those of insiders. Such share structures make it impossible for shareholders to win the vote on their proposals without support from insiders.
Similar resolutions have progressively earned support over the past several months at Microsoft (21% of the vote) and Apple (37.5% of the vote). Supporters of the Microsoft proposal included Norway’s trillion-dollar sovereign fund, the office of the New York City Comptroller, and California public pension giant CalSTRS. The Apple proposal, which the company tried to exclude from its proxy ballot, focused on risks to workers presented by AI, and was filed by the AFL-CIO.
“Meta and Alphabet, while rushing ahead with their AI programs, have unfortunately offered little transparency or accountability for the impacts of this complex and transformative new technology,” says Christina O’Connell, Ekō’s Senior Manager of Shareholder Engagement. “While both companies make policy claims of responsible development and deployment, we already see the missteps and failures of these very policies – and have reported on Meta’s failure to live up to their election content promises when AI-generated election ads inciting violence against non-Hindu voters were approved for publication. Shareholders have a right to clear information on the risk and mitigations associated with this AI race.”
The vote on Proposal 12 at Alphabet, another dual-class share AI company, will take place on Friday, June 7, 2024, at 9 a.m. Pacific time. After the vote, the company must file preliminary results with the SEC within 4 business days of the meeting.
For more information, please visit our campaign page and/or contact:
Jessica Dheere
Advocacy Director, Open MIC
(202) 330-3637
jdheere@openmic.org
Michael Connor
Executive Director, Open MIC
(917) 846-7608
mconnor@openmic.org