A group of seven investment bodies, including the New York City Pension Fund, have teamed up in an effort to get major U.S. Internet service providers to detail their privacy practices through the power of the shareholder resolution. As powers go, shareholder resolutions are far more about bringing change through public relations than via any financial coercion, but sometimes they really work.
The project is called the Open Media and Information Companies Initiative, and the goals of its campaign range from protecting free speech online to getting ISPs to document their network management practices for the public. So far the group has filed shareholder resolutions with the following companies: AT&T (s T); Charter Communications (s CHTR); CenturyTel (s CTL); Comcast (s CMCSA); EarthLink (s ELNK); Embarq (s EQ); Knology (s KNOL); Sprint Nextel (s S); Qwest Communications (s Q) and Verizon Communications (s VZ). The companies have all asked the SEC if they can avoid putting the shareholder resolutions in their proxy materials sent out each year to shareholders; they’re waiting for the SEC to decide if that’s actually an option. In previous years, the SEC has not required that similar resolutions (PDF) go before shareholders.
They join the nearly 190 shareholder resolutions that have been filed in the last three months before the SEC on issues ranging from executive pay to discrimination. If the resolutions are put before shareholders for a vote, the activists need to win at least 3 percent of the vote in order to make sure the issue stays on the ballot for the next year at each company. Even in the face of overwhelming shareholder approval, the resolutions aren’t legally binding, meaning a company can ignore them if it so chooses. (Exxon (s XOM), for example, has ignored many shareholder resolutions on global warming — even those that the majority of its shareholders approved.) But they can be effective in bringing greater awareness to a topic with institutional investors agitating for change.
As a strategy, getting institutional investors try to press for more privacy on the web will play a role in bringing attention to this issue, but I doubt that will help the average consumer hear — or care — about online privacy. At best, the Open MIC will help draw Congress back into the fray, although the investors’ requests for information from ISPs are likely to reveal the same policies as last year’s Congressional inquiry did. Perhaps we need some indie or documentary filmmaker to help dramatize the lack of online privacy in a way that will gradually seep into the common consciousness and make people realize that when it comes to free speech and privacy, citizens need to stay ever vigilant.