When Shareholders Warn and Boards Say No: Shareholder Proposals as an Early Warning System for Corporate Risk, and the Cost of Ignoring Them

By Sehr Khaliq, Director of Program Evaluation, and Tim Smith, Senior Policy Advisor

Much has been written about the significance of the $5 billion historic penalty and privacy reforms imposed by the FTC on Meta, but press surrounding the incident rarely references the fact that this risk was something shareholders had been repeatedly warning management about … for years.

In 2018, shareholders filed a proposal at Meta asking the company to issue a report discussing the merits of establishing a Risk Oversight Board Committee to address privacy/data risks that could threaten shareholder value. The Board opposed the proposal, arguing that the Board’s audit committee offered sufficient oversight. Since Meta is a dual class share company with CEO Mark Zuckerberg owning 99.7% of the outstanding Class B shares that represent only 13% of the economic ownership but grant him 61% of the voting power, the proposal got only 11.55% of the vote, which represented 45% support among non-insider shares.

In 2022, Meta shareholders raised the issue again, filing a proposal asking the company to commission an independent assessment of the Audit and Risk Oversight Committee’s capacities and performance in overseeing company risks to public safety and the public interest, and in supporting strategic risk oversight of these issues by the full Board. The Board again opposed the proposal, which got 10.5% of the vote, or more than a third (34.33%) of the independent vote. Despite management opposition, shareholders refiled the proposal in 2023, but this time the proposal got only 6.7% of the shareholder vote, or 17.90% of the independent vote.

Each of these times when shareholder proponents asked the company to strengthen its risk oversight, the Board opposed the call to action, until 2026 when the regulator fined the company $5 billion and required it to establish an independent privacy committee with unfettered control over decisions affecting user privacy. The order requires the company to designate compliance officers who will be responsible for Facebook’s privacy program and will report to the new Board privacy committee and can be removed only by that committee. In an ironic twist, the FTC order enhances independent third-party assessors’ ability to evaluate the effectiveness of Facebook’s privacy program and identify any gaps, echoing the demands of the early 2018, 2022 and 2023 shareholder proposals, but with a $5 billion fine attached.

However, this was not even the first case of a company being fined or being forced to pay damages in billions of dollars on an issue that shareholder proponents had asked them to consider – this year alone.

Three days after the Meta settlement announcement, on July 27th 2026 it was announced that Johnson and Johnson would pay $5.5 billion to settle talcum-powder related cancer lawsuits. In 2022 shareholders had filed a resolution asking J&J to discontinue global sales of talc-based baby powder, citing cancer litigation, asbestos concerns and growing financial risk, but management had dismissed their concerns about its talcum powder arguing that “decades of science have reaffirmed its safety” and that the company had taken adequate measures against litigation. With the Board opposing the proposal it received only 15.6% of the vote. Now the settlement may cost the company and shareholders $7 billion depending on participation. But even that is not the largest settlement this year.

In February 2026 Monsanto announced a Roundup™ class settlement agreement to resolve current and future claims for up to $7.25 billion. Shareholders had repeatedly asked Monsanto to report on the risks associated with glyphosate (including in 2015, 2016, and 2018) but the Board had opposed the proposals each time arguing that “the purported harms suggested in the proposal are simply unsubstantiated and unproven assertions improperly characterized as risks”, thus the requested risk analysis was speculative and unnecessary.

The largest settlement in 2026 (to date) came in August when Meta announced it would be paying $18 billion to settle U.S. lawsuits over children’s social media addiction. The settlement represents 9% of the company’s annual revenue and follows $2.4 billion in legal-proceeding charges recorded during the second quarter, when total costs and expenses increased 55% to $42.03 billion.

Shareholders had repeatedly filed shareholder proposals asking the company to address risks related to child safety online since 2020. In 2020 a proposal asked the company to publish a report to address potential adverse impacts to children (18 years and younger) and to the company’s reputation or social license, assess the impact of limits to detection technologies and strategies. The Board opposed the proposal arguing that it was “unnecessary and not beneficial to our stockholders”. The proposal got 12.4% of the vote. Shareholders refiled the proposal and in 2022 despite Board opposition it got 56.7% of the independent vote (because of the company’s dual class share structure the actual vote was 17.3%). The same year, Meta was fined $400 million for failing to safeguard children’s information on Instagram. Shareholders continued to file on the issue with the company in 2023, 2024 and 2025 but each time the Board opposed the ask, and the dual class share voting structure obstructed the voice of independent shareholders. Could being more responsive to these shareholder proposals have saved the company and shareholders, not to mention the victims, from harm? We will never know, but those arguing about the costs and benefits of shareholder proposals need to consider the value of these shareholder proposals as an early warning system that when unheeded causes real harm to people, planet, shareholders and the bottom line.

These four examples (captured in the table below) cost the 3 companies involved, and their shareholders, nearly $40 billion in damages and fines this year alone – a representation of the very real cost of ignoring shareholder proposals. And these examples are simply recent illustrations of investors raising important and material issues with Boards and management that get easily dismissed but billed as issues of public importance, resulting in costly penalties and settlements. They are a reminder of the value of shareholder resolutions as an early warning system, identifying material corporate risks which seek to preserve shareholder value and deserve more thorough scrutiny by Boards.