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SEC says Apple and Disney must hold shareholder votes on AI proposals

On Behalf of | Jan 15, 2024 | Securities and Compliance

The Securities and Exchange Commission rejected bids by Walt Disney Co. and Apple Inc. to exclude proposals on their use of artificial intelligence from shareholder votes, Reuters reports.

The AFL-CIO Equity Index Funds, an investment trust for union members’ pension plans, had filed proposals urging closer scrutiny of the two companies’ utilization of AI.  In their request to Apple, the group asked the tech giant to report “in its business operations and disclose any ethical guidelines that the company has adopted regarding the company’s use of AI technology.”  They made a similar request of Disney.  The unions’ concern about the prospect of AI replacing creative and professional workers was among the key issues in the strikes last year by the WGA and SAG-AFTRA.

Disney and Apple asserted that the AI proposals could be excluded from the shareholder agenda because they pertained to ordinary business operations rather than a matter requiring a special vote.

But the SEC said the companies could not avoid shareholder votes about their use of AI because the proposal transcends ordinary business matters and “does not seek to micromanage the company,”

The decision means that shareholders for the two companies will have the opportunity to vote on the issue at their upcoming meetings.

Brandon Rees, deputy director of the AFL-CIO’s office of investment, was quoted as saying that Apple and Disney “haven’t even begun to grapple” with the ethical issues concerning their AI usage.

The AFL-CIO’s statement to Apple said “AI systems should not be trained on copyrighted works, or the voices, likenesses and performances of professional performers, without transparency, consent and compensation to creators and rights holders.”

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