AT&T, Verizon to Exclude Resolutions On Data Sharing; Shareholders Fighting Back
By Yin Wilczek
Dec. 13 –AT&T (T) and Verizon Communications Inc. (VZ) recently indicated that they intend to omit from their proxy materials shareholder proposals calling on the companies to disclose how often they shared customer information with the U.S. and other governments.
The proposals–submitted in November by the New York State Common Retirement Fund and Trillium Asset Management LLC–also asked the companies to disclose the type of customer information that was provided to the governments, the number of customers affected by government data requests, and efforts by the companies to protect customer privacy rights (225 SLD, 11/21/13).
In response, representatives from the New York state fund and Trillium Dec. 13 told Bloomberg BNA that they are opposing the companies’ stance regarding the resolutions.
The resolutions were filed in the wake of news reports earlier this year that telecommunications companies had cooperated with U.S. government surveillance programs.
Other companies, including Google Inc. (GOOG) and Microsoft Corp., (MSFT) have issued “transparency reports” disclosing information regarding government data requests.
In a Dec. 5 letter submitted through the Securities and Exchange Commission’s no-action process, AT&T told the commission that the proposal was excludable on several procedural grounds, including that it relates to ordinary business matters. “Management is in the best position to determine what policies and procedures are necessary to protect customer privacy, to ensure compliance with applicable legal and regulatory requirements in the states and countries in which we operate, and to apprise AT&T’s customers of the steps that are taken to protect their privacy,” the company said.
In addition, AT&T said the proposal could be excluded because it relates to an ongoing lawsuit alleging that the company illegally provided customer information to the National Security Agency.
Eric Sumberg, spokesman for the New York State Comptroller’s Office, told Bloomberg BNA that the fund “will respond to AT&T at the SEC in the coming weeks.”
The New York State Common Retirement Fund–which owns more than 15 million AT&T shares that are valued at about $552.5 million–was the lead filer on the AT&T proposal.
For its part, Verizon told Trillium in a Nov. 25 letter that it intends to exclude Trillium’s resolution because of “certain procedural deficiencies,” including that the firm failed adequately to show its eligibility to file the resolution.
Trillium responded to the company’s allegations by attaching further proof of its eligibility in a Dec. 9 letter.
Jonas Kron, senior vice president and director of shareholder advocacy at Trillium, told Bloomberg BNA in an interview that the firm now is awaiting Verizon’s response to the Dec. 9 letter. “We don’t know yet if Verizon will seek a no-action letter from” the SEC’s Division of Corporation Finance, he said. “It is my hope that Verizon will not seek to exclude the proposal, but if they do they should do it through the Corp Fin no-action process.”
Kron added that Trillium filed the data sharing proposals because it felt strongly about them. “We are going to defend these proposals strongly against any question or attacks from the companies,” he said.
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