This week, a regulatory decision will compel the owners of Disney to deliberate on whether the corporation should disclose its utilization of synthetic intelligence. The Securities and Exchange Commission has sanctioned a vote on the AFL-CIO Equity Index Fund’s investor proposal, which mandates Disney to elucidate its AI utilization. If the proposal gains approval, Disney may need to generate a transparency report elucidating its use of artificial intelligence in its day-to-day functions. This report could also delineate the board’s role in overseeing AI utilization and any ethical standards the company has implemented for deploying this innovative technology.
Disney had sought to have this proposal, which coincides with the ongoing proxy battle between Disney and dissident investor Nelson Peltz, excluded by the SEC. The corporation argued that its use of this specialized technology is merely part of its regular business operations and does not necessitate shareholder endorsement. However, the SEC ruled to the contrary, as initially reported by The Hollywood Reporter.
The AFL-CIO, comprising organizations such as the WGA East, Actors Equity, Communications Workers of America, and The American Federation of Musicians, contended that the vilification of AI in the American workforce undermines the nation’s economic foundation and jeopardizes the already shrinking middle class.
In a parallel development, a comparable proposal concerning AI implementation, introduced by the coalition income bank, must also undergo shareholder voting as per the SEC’s ruling, this time involving Apple’s stockholders.
The forthcoming Disney vote, scheduled for early April, is poised to attract heightened attention due to the ongoing dispute with Peltz. Notably, institutional investors, encompassing hedge funds, mutual fund firms, and pension funds, typically engage in shareholder voting at the majority of monthly meetings, with approximately 90% participation. Conversely, retail traders, or individual stockholders, typically exhibit lower participation rates, with only around one-quarter to one-third casting votes on proposed resolutions.
The current scenario is expected to witness increased retail investor participation, spurred by the demand for transparency from Disney regarding its AI utilization amid the Peltz dispute. Furthermore, the AI-related query poses a new challenge for shareholder voting dynamics. Recent years have seen shareholder proposals predominantly addressing issues like climate disclosure, racial equity, civil rights, corporate and political expenditure, executive remuneration, and governance matters, as indicated by a Harvard study analyzing voting trends from 2018 to 2022. The introduction of specific technology applications introduces a novel dimension to shareholder activism.
These proposals emerge following a period of heightened activism by the Writers Guild of America and SAG-AFTRA, which, in part, focused on the implications of AI utilization.
