Bay Area man takes on Apple with push for more human rights accountability

https://www.mercurynews.com/2017/12/29/bay-area-based-apple-shareholder-asks-apple-to-create-human-rights-committee/

By SEUNG LEE | slee@bayareanewsgroup.com | Bay Area News Group

PUBLISHED: December 29, 2017

CUPERTINO — A Bay Area man with a small stake in the world’s largest technology company is fighting to put human rights front and center throughout Apple’s global operations — and he’ll soon find out whether other Apple shareholders back his plan.

Jing Zhao of Concord — a long-time proponent of human rights measures aimed at holding technology companies accountable for their actions around the world — has proposed that Apple should create a human rights committee to “review, assess, disclose, and make recommendations to enhance Apple’s policy and practice on human rights,” according to Apple’s proxy statement, filed with the Securities and Exchange Commission this week.

In his supporting statement, Zhao listed Apple’s decision in July that took down hundreds of virtual private network apps in its Chinese App Store for iPhones. The move led to an inquiry from two U.S. senators on whether Apple is enabling Beijing’s internet censorship and other human rights violations.

Apple’s board has recommended a vote against Zhao’s proposal, arguing in its proxy statement that the Cupertino company already has an independent audit committee and Supplier Responsibility Team that help Apple take action on its “unwavering commitment to social responsibility and human rights.”

Zhao’s proposal will be one of six on the ballot at the shareholders meeting February 13 at Apple Park. Most of the others are bureaucratic votes such as re-electing board directors and appointing an independent accounting firm.

Zhao, who owns at least $2,000 in Apple stock, has been a minor, but extremely persistent voice in raising human rights actions with tech companies. Zhao has made similar proposals for several years annually to Google, Yahoo and Altaba — Yahoo’s rebranded name after Verizon purchased the company — with none approved so far by shareholders.

In 2011, Zhao got a proposal on Yahoo’s ballot for the company to adopt a code of human rights principles — after five years of falling short, according to a 2011 CNN article. The proposal drew 25 million “yes” votes and 779 million “no” votes.

Zhao, a researcher who runs an independent think tank called US-Japan-China Comparative Policy Research Institute (CPRI), has made at least 36 human rights-related proposals to Silicon Valley companies since 2010 and made proposals to Apple every year since at least 2015, according to fellow Apple investor James McRitchie.

Last February at Apple’s annual shareholders meeting, shareholders voted to reject his proposal that Apple should implement an oversight committee to reform executive pay.

Zhao declined a request for comment on his latest proposal.

Apple has pushed back against Zhao’s argument concerning the recent news in China, saying the company was compelled to follow Chinese law or face expulsion.

“We do not have the option to ignore laws, either in China or in any other country where we provide products and services,” said Apple. “We would rather not have been required to remove the apps, but we must follow applicable law wherever we do business.”

Many investor-written proposals rarely see the light of day on the ballot. Companies frequently petition the SEC to exclude proposals by arguing they are already considered in their day-to-day operations and do not require shareholder intervention.

But the SEC, in a surprising move, decided to include Zhao’s proposal to Apple on the ballot for the first time, saying Apple did not prove the proposal was “not sufficiently significant to the (Apple’s) business operations.”

“The board’s analysis does not explain why this particular proposal would not raise a significant issue for the Company,” wrote SEC’s senior special counsel ‎Matt McNair to Apple’s Vice President of Corporate Governance Gene Levoff in a Dec. 21 letter.

McRitchie, a self-described “shareholder advocate” from Elk Grove, has a proposal of his own on the ballot. That one seeks to allow more shareholders to join a nominating group for prospective board directors and to increase the potential number of nominees.

McRitchie does not believe his or Zhao’s proposals will get the majority vote they need to pass. But rather than focusing on the end goal, he took pride in the journey to get on the ballot.

“Just because it doesn’t pass doesn’t mean that it’s not substantial,” said McRitchie. “Apple needing to pay attention to human rights is important for its reputation. (Apple) has Al Gore on the board; it has social responsibility on its mind.”