New York, NY…Citing intense global concern over the impact of disclosures regarding surveillance programs directed by the U.S. government agencies, investors in AT&T and Verizon Communications have filed shareholder proposals calling on the companies to publish semi-annual reports detailing how often they have shared information with U.S. or foreign governments and what type of customer information has been shared.
The prime sponsor of the AT&T proposal is the $160.7 billion New York State Common Retirement Fund, which manages assets on behalf of more than one million State employees and retirees. Trillium Asset Management LLC, a Boston-based investment management firm, is the lead proponent of the Verizon proposal. The American Civil Liberties Union of Northern California and other organizations and investment firms including co-filed at one or both of the companies.
“As shareholders, customers, and citizens we deserve to know if phone companies like AT&T and Verizon are handing our personal information over to the government,” said ACLU of Northern California Executive Director Abdi Soltani. “Secret, unchecked surveillance is antithetical to democracy, and the government is going too far.”
New York State Comptroller Thomas P. DiNapoli, trustee of the New York State Common Retirement Fund, said, “AT&T’s failure to disclose what customer information it shares with U.S. and foreign governments presents significant risk to shareholder value. Transparency allows investors to make informed decisions about corporate behavior. Publishing regular reports on requests for information from governments would be an appropriate response to shareholder and customer concerns about trust and privacy in the digital world.”
The shareholder proposals note that reports on government data requests are now published regularly by Internet companies such as Google, Microsoft, Twitter, LinkedIn, Facebook, Yahoo!, and Apple. However, AT&T and Verizon have not publicly disclosed the extent and nature of information provided to the government. And while Google and Microsoft have sued seeking authorization to disclose further information to the public, neither AT&T nor Verizon has done so.
Jonas Kron, Trillium’s senior vice president and director of shareholder advocacy, said, “Verizon and AT&T are not managing this crisis effectively. Now is the time for them to proactively demonstrate that they will protect user privacy, because it is in the interest of everyone – investors, citizens, our nation and the companies. The business case is compelling – opportunities for growth may be lost – but equally important are the civil liberties that must be protected.”
The proposals at AT&T and Verizon, which are scheduled to be voted on at the companies’ annual meetings in spring 2014, note that controversy over U.S. government surveillance programs has spurred massive global press coverage, hearings in the U.S. Congress and European legislature, and widespread calls for reform. Brazilian President Dilma Rousseff has called the NSA surveillance program “a breach of international law.” U.S. Senator Ron Wyden has said, “I have to believe the civil liberties of millions of American have been violated.”
While AT&T and Verizon must comply with their legal obligations, the proposals state, “failure to persuade customers of a genuine and long-term commitment to privacy” could present the companies with serious financial, legal and reputational risks.
“Consumer trust is critical for business in the digital age,” said Michael Connor, executive director of Open MIC, a non-profit organization that works with shareholders on media issues. “These proposals highlight the need for companies to take the lead and defend the privacy rights of their customers.”
Filers of the AT&T proposal are The New York State Common Retirement Fund, Trillium Asset Management LLC, the ACLU of Northern California, and Arjuna Capital.
Filers of the Verizon proposal are Trillium Asset Management LLC, the ACLU of Northern California, Park Foundation, and CleanYield Asset Management.