Question

should "social action" measures appear on proxy statements? why or why not?

Answer 1

In general, a proxy statement constitutes an official document as per the mandates and instructions of the Securities and Exchange Commission (SEC) containing all the important and relevant information for the shareholders of any company or business organization that will be broached at the annual shareholder meeting. These information predominantly cover various facts and highlights about the company's overall business or economic performance and operation such as salaries and bonus of employees and managers, potential business plans to be undertaken by the directors, important announcements or declaration by the company management, various audit results and so forth which can be elaborately and appropriately discussed in the official shareholder meetings with the objective to come up with various business decisions and plans pertaining to operational and managerial aspects. Therefore, the primary objective of the proxy statement is to guide the board of directors and shareholders in undertaking various managerial and investment-related decisions or actions. Now, from an exclusively business or commercial perspective, social action measures are not directly included in the proxy statement as these typically do not relate to internal functioning or operational aspects of any business organization or company. The social action goals or objectives of any commercial enterprise or business organization basically concern any non-profit activity or conduct which would benefit the communities, individuals, society, and/or environment as a whole. Now, the social action goals or measures can essentially indicate the level of social and communitarian engagement or public relation by the company to some extent which can be considered as a non-economic indicator company's success as higher levels of public engagement and social or communitarian involvement would expectedly facilitate its product or service promotion and marketing. Therefore, higher social activities or conducts by any company or business organization can potentially strengthen its public relation and engagement which can indirectly benefit the company in various capacities. In this regard, social action plans or agendas undertaken by any company can provide some important implications to the shareholders or potential investors about the level of public engagement and reputation that the company has been able to gain, which can be practically regarded as one of the major indicators of operational success. Furthermore, a company can evidently enhance its brand value and name through higher social and communitarian engagements and activities such as fundraising for any philanthropic cause, conducting social awareness programs and campaigns, organizing public donation initiatives, and so on. These activities not only increase the company reputation and goodwill but provides the necessary exposure to establish the brand value or recognition of the company in the public sphere which can immensely attract potential commercial success in the near or distant future. Therefore, social action measures can be ideally regarded as evaluators of company success from the perspective of wider public recognition and brand reputation, which can provide helpful information about the overall and broader progress or performance of the company to the shareholders and investors. Hence, considering the broader implications of these actions or measures in establishing and augmenting the social recognition and publicity of any company or business enterprise, the inclusion of social action measures and plans in the proxy statement can perhaps provide better and more comprehensive guidance to shareholders, directors, and investors to undertake essential operational, managerial, and investment-related decisions.