Telecommunications giant AT&T is facing a shareholder lawsuit brought by four New York City public pension funds, which allege the company unlawfully excluded a workforce diversity proposal from its proxy materials ahead of its annual shareholder meeting.
The lawsuit, filed in federal court in Manhattan, challenges AT&T’s decision to block shareholders from voting on a proposal that would have required the company to disclose detailed demographic information about its workforce, including data on race, ethnicity, and gender. The pension funds argue that the omission violates federal securities laws and improperly deprives investors of their right to vote on material governance issues.
Pension Funds Challenge Proxy Exclusion
The plaintiffs include pension systems representing New York City employees, teachers, police officers, and firefighters. Collectively, these funds manage billions of dollars in retirement assets and regularly engage with publicly traded companies on corporate governance, transparency, and risk management issues.
According to the complaint, the pension funds submitted the proposal under the Securities and Exchange Commission’s shareholder proposal rules, which generally require companies to include qualifying proposals in proxy statements. The proposal sought enhanced public disclosure of workforce demographic data that AT&T previously made available but stopped publishing after 2023.
The funds contend that this information is critical for evaluating the company’s human capital management practices, particularly at a time when investors increasingly view workforce diversity and transparency as indicators of
long-term performance and risk mitigation.
AT&T Cites SEC Guidance
AT&T justified excluding the proposal by pointing to recent guidance issued by the U.S. Securities and Exchange Commission, which allows companies to omit certain shareholder proposals if they have a “reasonable basis” to conclude that the proposal does not meet regulatory requirements.
The pension funds dispute that interpretation, arguing that the SEC guidance does not give companies broad discretion to block shareholder votes on topics that are otherwise permissible under federal securities rules. In their filing, the plaintiffs claim AT&T’s reliance on the guidance is misplaced and
inconsistent with long-standing shareholder protections.
The lawsuit seeks injunctive relief, asking the court to order AT&T to include the proposal in its proxy materials and to prohibit the company from soliciting shareholder votes without it.
Focus on Workforce Transparency
At the center of the dispute is AT&T’s decision to stop publicly releasing workforce demographic data while continuing to submit similar information to the Equal Employment Opportunity Commission, as required by law. The pension funds argue that there is no legitimate business justification for withholding the data from investors while still providing it to regulators.
They further assert that transparency around workforce composition is increasingly material to shareholders, particularly in industries facing regulatory scrutiny, labor challenges, and reputational risk. By excluding the proposal, the funds say, AT&T denied investors a meaningful opportunity to weigh in on corporate policy.
Broader Legal and Political Context
The case comes amid heightened debate over diversity, equity, and inclusion initiatives in corporate America. In recent years, some companies have scaled back public DEI disclosures in response to political pressure, legal challenges, and shifting regulatory interpretations.
At the same time, institutional investors and pension funds have continued to push for greater transparency and accountability, arguing that workforce data is relevant to evaluating management effectiveness, compliance risks, and long-term shareholder value.
Legal experts note that the outcome of the AT&T lawsuit could have broader implications for shareholder rights, particularly regarding how companies interpret SEC guidance when deciding whether to exclude proposals from proxy statements.
Potential Impact on Corporate Governance
If the court sides with the pension funds, the ruling could reinforce limits on corporate discretion in excluding shareholder proposals and reaffirm the role of investors in shaping governance policies. Conversely, a decision favoring AT&T could embolden other companies to rely on similar regulatory interpretations to
restrict shareholder votes on sensitive topics.
For now, AT&T has not publicly commented on the lawsuit, and the company’s annual shareholder meeting timeline remains unchanged. The pension funds argue that without swift court intervention, shareholders will suffer irreparable harm by losing the opportunity to vote on the proposal this year.
As corporate governance battles increasingly move into the courtroom, the AT&T case underscores the growing tension between shareholder activism and corporate efforts to limit disclosure obligations. The outcome may help define how far companies can go in excluding investor proposals under evolving securities regulations.
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