Reading and Voting on the Fine Print

Understandably, normal people do not like reading pages and pages of fine print. In fact, there are very few circumstances in which most individuals wade through the contracts and other forms they sign at doctor’s offices, banks, and the like. For example, the authors of a scholarly article published in 2014 in the Journal of Legal Studies observe that “only one or two of every 1,000 retail software shoppers access the license agreement and that most of those who do access it read no more than a small portion.” There is no reason to believe that anything has changed in the last decade: consider that Erika Kullberg has achieved massive success as a “financial influencer” with her tagline, “I read the fine print so you don’t have to!”

While your fine-print habits are unlikely to change substantially—mine aren’t either, to be sure—there is one area in which I suggest that readers pay more attention to a document that few find exciting: the lengthy proxy statement that every publicly traded company issues each year in advance of its annual meeting. I actually do enjoy reading them, and one reason is taking on special prominence: the rise in politically charged proposals submitted by shareholders from both the left and the right, for nearly all of which every company recommends the vote “No.”

In June 2023, I published a piece titled “Corporate Culture Wars.” A record number of shareholder proposals had been submitted to Russell 3000 companies in the first five months of 2023, and I took the occasion of Mastercard’s upcoming annual meeting as an opportunity to speak about proposals from the right that advocated transparency about the practice of institutionalized discrimination in the name of diversity, equity, and inclusion (DEI).

As it happens, even more proposals were submitted in the first five months of 2024. It will be interesting to see what happens now that we are in 2025, which is sociopolitically a long way from 2023 and the first half of 2024.

What attitude are companies taking—and what attitude will they take in the months ahead—in view of the second Trump administration’s take-no-prisoners attitude to DEI? Already in mid-2024, a number of major businesses began to scale back DEI efforts: among the first were Tractor Supply and John Deere, two agricultural supply giants that announced in June and July 2024, respectively, that they would be moving away from diversity initiatives that they had championed just months earlier. Since then, numerous companies, from Chipotle to Google to Regeneron, have “deleted or softened their DEI language,” often silently.

Of immediate interest are companies that had to produce their annual booklet after Trump’s election but before his inauguration. Take Apple, one of the country’s largest companies, and (again) John Deere, both members of the Russell 3000 Index. On January 10, each issued a proxy statement in advance of shareholder meetings scheduled for next week: respectively, February 25 and 26.

The members of the board of directors at John Deere cannot have enjoyed formulating rhetoric that counsels shareholders to vote against both of two proposals about DEI that take different sides. The one, presented by the conservative National Legal and Policy Center, begins by noting, “Hiring disparities persist across race and gender. They pose substantial societal and company risks.” The other, presented by As You Sow, refers to the “ambiguous and inconsistent shift in policies and practices” announced in July 2024 and suggests that “[i]f the company has dismantled key diversity, equity, and inclusion … policies and practices, this exposes it to financial, competitive, legal, and reputational risks.”

As for Apple, the National Center for Public Policy Research, a major player in anti-DEI efforts and one involved in a Mastercard proposal I highlighted two years ago, requests that the company “consider abolishing its Inclusion & Diversity program, policies, department and goals.” The directors’ negative response is brief and filled with boilerplate language (e.g., “we strive to create a culture of belonging where everyone can do their best work”). Presumably the aim is to stir up as little fuss as possible, especially since Apple’s CEO, Tim Cook, was present in the Capitol rotunda on January 20—this after congratulating Trump on X the morning after Election Day (“We look forward to engaging with you and your administration”) and, later, donating $1 million of his own money to the inaugural committee (Apple itself gave nothing).

While it is true that individuals tend to own much less stock than institutional investors and also that most voting outcomes are not binding, a strong showing in favor of a shareholder proposal can nonetheless spook a board. In recent years, retail investors have voted not even thirty percent of their shares. So read the fine print and let’s get that percentage up.