Shareholders Matter in Network Neutrality Rules

The SEC has moved network neutrality from the murky back rooms of day-to-day operations into the bright light of of shareholder resolutions. 

This is a significant turn for the SEC and it opens up a new avenue in the campaign for net neutrality. As the SEC helpfully reminds us, “One of the key rights of shareholders is the right to vote their shares on important matters that affect the companies they own.” The SEC gives companies a fair amount of discretion on resolutions. In previous years, the SEC’s Division of Corporation Finance ruled that similar net neutrality proposals pertained to “ordinary business” and could be excluded from shareholder ballots. 

The telcos have reason to be afraid. Proxy fights have derailed business plans and taken down CEOs. Most successful campaigns have been carried out by activist fund managers with substantial stakes in relatively small companies (by stock exchange standards). 

The Benedictine Sisters of Mount St. Scholastica, the Nathan Cummings Foundation, and Trillium Asset Management have led the effort to put this on shareholder ballots. They will need help to move it forward. Proposals must claim a minimum percentage of support in order to be allowed on the ballot next year.

This time of year about 20 percent of U.S. households receive proxy voting forms, and most are promptly discarded. If you ask your parents and grandparents, chances are good someone owned some shares of Ma Bell at one time and now has voting rights in a telco.

If your only investments are in mutual funds, you can still make your voice heard. Contact the fund management company, tell them you support net neutrality, and ask them how they are planning to vote on the issue.

AT&T’s annual meeting is the last Friday in April. There are roughly six billion common shares outstanding. It may be a long-shot to get three billion shares to vote for net neutrality on the first attempt, but three hundred million voting shares (enough to carry the battle forward to future years) seems attainable, no?