Apple Inc. lost a first-of-its-kind bid to block an investor request for a new board committee focused on human rights.
The proposal will go to a shareholder vote after a Dec. 21 letter from the Securities and Exchange Commission disagreed with the iPhone maker’s argument that a concern for human rights is so central to its day-to-day business that it shouldn’t be on the ballot.
In making that argument, Apple was the first company to test out recent guidance from the SEC’s staff seeking more board involvement in determining which proposals should go to a vote.
Apple’s take on the guidance had some investors worried that proposals on social and environmental issues that could be considered part of a company’s regular business wouldn’t be allowed. “That’s not the case,” said Sanford Lewis, an attorney representing a shareholder who filed another proposal at Apple on greenhouse gas emissions.
So “there’s going to be some level of relief in the shareholder community,” he told Bloomberg Law.
The proposal for a new board committee came from human rights activist Jing Zhao, who in recent years has submitted a number of shareholder resolutions on this topic at companies such as Facebook Inc. and Alphabet Inc. “Shareholders should have the right to vote on this important policy,” Zhao wrote earlier this month in response to Apple’s attempt to block his proposal.
The other proposal from Jantz Management asked Apple directors to explore eliminating as much of the company’s emissions footprint as possible and offsetting the rest by a certain date. That proposal can stay off the ballot, according to the SEC, because it’s considered micromanaging.