What is a Shareholder Resolution?
A shareholder resolution is a proposal to be voted on by a company's shareholders at either an annual meeting or a special meeting of shareholders.
Since companies can have thousands of shareholders, most vote by proxy rather than attend the meeting in person.
When shareholders offer resolutions, they are engaging management in a discussion of an issue that concerns them. Shareholder resolutions, therefore, involve far more than simply filing with the company. The filer has the responsibility of pressing its case with the company. This process can be both time-consuming and expensive, which is why most social issue resolutions have a number of co-filers.
To submit a resolution a shareholder must have held at least $2000 of the company's stock for at least one year prior to the filing date. The shareholder must also state his/her intention to hold the stock through the company's annual meeting.
The goal of filers is not simply a vote of the shareholders but a change in corporate direction. Publicity generated by the resolution also helps the issue under consideration gain much needed public exposure. If the filers achieve their goal before the annual meeting, they withdraw the resolution. Should negotiations fail to produce a satisfactory result, the filers' objective is to have a strong showing and gain enough votes to place the resolution on the proxy ballot the next year and thereby continue the discussions with management. Currently, a proposal must receive at least 3% of the vote to be brought back the year following its first submission. After that it must receive at least 6% of the vote to be brought back a third time and 10% of the vote to be brought a fourth time or anytime thereafter.