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At Microsoft’s early December annual meeting, a shareholder proposal on AI “misinformation and disinformation” was supported by 21% of the votes cast. Per the proxy, Proposal 13 requested that “the Board issue a report, at reasonable cost, omitting proprietary or legally privileged information, to be published within one year of the Annual Meeting and updated annually thereafter, assessing the risks to the Company’s operations and finances as well as risks to public welfare presented by the company’s role in facilitating misinformation and disinformation disseminated or generated via artificial intelligence, and what steps, if any, the company plans to remediate those harms, and the effectiveness of such efforts.” The supporting statement by Arjuna Capital focuses on the threat that such misinformation may pose to democracy “by manipulating public opinion, undermining institutional trust, and swaying elections” particularly given that 2024 brings the “United States presidential election and significant Senate and House races.”

Multiple outlets, including Responsible Investor and this blog from Arjuna Capital, have cited that six late 2023 proposals on AI transparency are “pioneering” and the first of their kind. Apple and Disney were another two of the six companies that received such proposals — both were from AFL-CIO Equity Index Funds and the proponents’ supporting statements were less specifically focused on the threat to democracy. The proposal received by Disney is worded as follows:

Shareholders request that The Walt Disney Company (the “Company”) prepare and publicly disclose on the Company’s website a transparency report that explains the Company’s use of Artificial Intelligence (“AI”) in its business operations and the Board’s role in overseeing AI usage, and sets forth any ethical guidelines that the company has adopted regarding its use of AI. This report shall be prepared at a reasonable cost and omit information that is proprietary, privileged, or violative of contractual obligations.

Both Disney and Apple sought to exclude the AI transparency proposals under Rule 14a-8(i)(7) on the basis that they deal with ordinary business operations and seek to micromanage the companies. The Staff was unable to concur, so we’ll watch how things shake out with these and similar shareholder proposals during the 2024 proxy season.

We’ll be tracking this trending topic — including vote results at companies where AI-related proposals end up on the ballot — on our Proxy Season Blog where we continue to regularly post new items for TheCorporateCounsel.net members. Members can sign up to get that blog pushed via email whenever there is a new post. If you do not have access to the Proxy Season Blog or all the other great resources on TheCorporateCounsel.net, sign up today.

– Meredith Ervine