Apple shareholders approve a civil rights audit and investigation of the risks of its NDAs

Illustration by Alex Castro / The Verge

At Apple's annual shareholder meeting, investors had more to consider than just how much money CEO Tim Cook and other executives stand to make. Issues with social and cultural impact were brought up by shareholder proposals. For the first time in years, two proposals passed on Friday.

The shareholders re-elected the same board of directors and approved the executive pay package outlined in the proxy statement. They followed Apple's recommendation in voting on eight of the ten shareholder proposals presented, as noted in an SEC 8-K filing.

One of the two measures passed was proposal number 10, which focused on non-disclosure agreements, with support from Nia Impact Capital, the TEA coalition, and Silenced No More co-sponsor Ifeoma Ozoma. Apple was pushed to prepare a report on potential risks from its use of non-disclosure agreements in the context of harassment, discrimination, and other acts.

Shareholders of Apple Inc. (“Apple”) ask that the Board of Directors prepare a public report assessing the potential risks to the company associated with its use of concealment clauses in the context of harassment, discrimination and other unlawful acts. The report should be prepared at reasonable cost and omit proprietary and personal information

In Oct, I was offered a separation agreement with a suppressive NDA and a pre-written statement about why I was leaving the company.

I've helped make such contracts illegal in Washington state and helped shareholders demand transparency and accountability.

How's your heads now?

— Cher Scarlett #StandWithUkraine (@cherthedev) March 4, 2022

In response, Apple said it has added language to all separation agreements for US employees, explicitly noting that non-disclosure clauses do not prevent them from discussing harassment or discrimination. The shareholders want the company to add that language to its employment agreement so they can argue that it provides more legal protection than just sitting in the Business Conduct Policy.

Marketwatch notes that the number of abstentions prevented it from meeting the threshold of fifty percent or more in favor, but preliminary voting showed shareholders slightly favored approving the measure. According to Apple's 8-K filing with the SEC, votes that came in on Friday pushed the in-favor crowd above fifty percent and got it approved.

When we need to protect intellectual property or competitively sensitive information, it makes sense to use.NDAs. They don't make sense for cases of harassment or discrimination as they mask issues from other employees and investors.

The Civil Rights Audit proposal is one of the ones where shareholders broke with the company. The Board of Directors was asked to initiate an audit measuring the impact of Apple's policies and practices on civil rights of company stakeholders, with results and recommendations posted publicly on Apple's website.

RESOLVED that shareholders of Apple Inc. (“Apple”) urge the Board of Directors to oversee a third-party audit analyzing the adverse impact of Apple’s policies and practices on the civil rights of company stakeholders, above and beyond legal and regulatory matters, and to provide recommendations for improving the company’s civil rights impact. Input from civil rights organizations, employees, and customers should be considered in determining the specific matters to be analyzed. A report on the audit, prepared at reasonable cost and omitting confidential or proprietary information, should be publicly disclosed on Apple’s website.

Apple said it already fulfilled the proposal's objectives through commitments to inclusion and diversity, risk assessments, transparent public reporting, and other measures. Perhaps shareholders were unconvinced by what employees had to say about the company's culture or by recent leaks, and they passed the measure with 5,125,272,012 votes.

One of the three parties that submitted the measure said that Apple's reputation as an Inclusive and Equitable Changemaker is at risk. A properly conducted Civil Rights Audit will help the company effectuate the reputation that it has built of being an inclusive and equitable company.

The proposals are non-binding, but in a statement to CNBC, the executive director of the SOC Investment Group said shareholders typically hold the company's board to account when something passes. Dr. Hull hoped that this result would push Apple to do the work necessary to maintain a good reputation and push back against potential abuses in the workplace.