Legal Definitions - shareholder resolution

A shareholder resolution is a formal proposal submitted by one or more shareholders of a company to be voted upon by all shareholders at an annual or special meeting. These proposals typically concern matters of corporate governance, company policy, or strategic direction, and they allow shareholders to express their views and influence the company's management and board of directors.

• Example 1: Executive Compensation Review

  A group of institutional investors, who collectively own a significant percentage of a publicly traded technology company, submits a shareholder resolution proposing that the company's board of directors establish an independent committee to review and potentially revise the compensation packages for its top executives. The investors believe the current compensation is excessive and not sufficiently tied to long-term performance. This is a shareholder resolution because it is a formal proposal put forward by shareholders for a vote, aiming to influence a key aspect of corporate governance – executive pay.

• Example 2: Environmental Impact Reporting

  An individual shareholder, concerned about climate change, files a shareholder resolution requesting that a major energy company publish an annual report detailing its greenhouse gas emissions, water usage, and other environmental impacts, along with specific targets for reduction. The shareholder believes greater transparency will encourage more sustainable practices. This illustrates a shareholder resolution as it's a formal request from a shareholder for the company to adopt a new policy or reporting standard, which will then be presented to all shareholders for a vote at the next meeting.

• Example 3: Board Diversity Initiative

  Several advocacy groups, holding shares in a large retail corporation, jointly submit a shareholder resolution urging the company to adopt a policy committing to a minimum percentage of diverse candidates (based on gender, ethnicity, and background) for all future board of directors' appointments. They argue this will improve decision-making and better reflect the company's customer base. This is a shareholder resolution because it represents a formal proposal from shareholders seeking to influence the composition and diversity policies of the company's leadership, requiring a vote from the broader shareholder base.