According to Airbnb, the FedEx delivery driver to its San Francisco headquarters is so bad at his one job that he’s faking delivery receipts.
If that wasn’t on your business-wars bingo card, you’re not alone. But fair warning—just like the “room in house” listings you see on the vacation rental company’s website, Airbnb’s side of the story is designed primarily for its own comfort and convenience.
Last December, two groups of conservative shareholders submitted separate proposals for Airbnb’s annual meeting last month. Despite its fully online business model, Airbnb—like almost all publicly traded companies—relies on a rather arcane method of hard-copy mail for resolution submissions.
The Heritage Foundation filed a resolution calling for transparency into the business impact of the company’s past buckling to the anti-Israel “Boycott, Divestment, & Sanctions” movement, while the American Conservative Values ETF (ACVF) asked Airbnb to issue a report on its apparent viewpoint discrimination against customers who employees deem “hateful” under Airbnb’s vague terms of use policy.
Both shareholders sent their resolutions via FedEx. Both met Airbnb’s deadline. And both followed Airbnb’s procedures to a tee.
And that’s where the story takes a distinctly wrong turn for Airbnb.
Broadly speaking, a company has three choices when it receives a shareholder proposal. First, it can allow shareholders to vote on the proposal at the upcoming annual shareholder meeting. This almost always delivers a result that is entirely in the bag for management, thanks to the progressive proxy advisor duopoly of ISS and Glass Lewis, which dictates 97 percent of the vote at any given company.
Second, a company can also ask permission from the U.S. Securities and Exchange Commission to exclude the proposal from the ballot. To do this, it has to have a valid reason why the proposal fails to conform to the SEC’s extensive rules on shareholder proposals. Otherwise, companies must include conforming proposals in their proxy materials.
Finally, a company can meet or negotiate with the shareholder, who may then withdraw its own proposal in exchange for policy or behavioral changes at the company.
What option does not appear on that list? Simply ignoring the proposals or claiming that FedEx did not deliver them. When the ballot went public a month before Airbnb’s annual meeting in early June, it lacked the validly submitted proposals. Both groups reached out to Airbnb to find out what went wrong. So did my colleagues at Alliance Defending Freedom, which successfully defended shareholder proposals at the SEC—including from Heritage and ACVF—over a dozen times during this shareholder season.
The conversation didn’t go as anyone expected. At first, representatives said they had never received the proposals—a claim that didn’t hold up when we produced signed copies of the delivery receipts, marked as received by Airbnb’s mailroom manager.
Unfazed by the evidence, Airbnb was still so unwilling to admit its mistake that it shifted the blame to a FedEx driver who, Airbnb would have its shareholders believe, forged the two signatures on two separate days. As if that claim weren’t flimsy enough, consider that one shareholder proposal did somehow survive the labyrinthine world of delivery drivers and Airbnb’s mailroom—a resolution filed by the left-leaning Connecticut Retirement Plans and Trust Funds.
Throughout a back-and-forth that lasted a week, Airbnb turned down every opportunity to do right by its own shareholders. For instance, Airbnb refused to add the proposals to a provisional ballot, and it rejected our suggestion that it agree to allow the proposals to be on next year’s ballot.
Instead, like Lucy Van Pelt offers Charlie Brown one more go at kicking the field goal, Airbnb “offered” to allow Heritage and ACVF to resubmit their proposals next year—which it is already legally required to do—and take their chances with the mailroom just one more time.
Like vacation rentals themselves, Airbnb’s actions may come with steep hidden fees. Behind all the finger-pointing and lame excuses, Airbnb is breaking the law. That’s why, in partnership with Boyden Gray, ADF filed a lawsuit against Airbnb on behalf of our respective clients, ACVF and Heritage.
Maybe Airbnb doesn’t want to answer the questions that Heritage and ACVF are asking in their proposals. That’s understandable. But at the end of the day, companies belong to their shareholders. Airbnb’s board and management can choose to provide transparency to their investors, they can recommend a “no” vote on the ballot and count on ISS and Glass Lewis to have their back, or they can fight shareholders at the SEC.
But Airbnb can’t flat-out ignore its own shareholders. And it can’t blame the mailman either.
Alexandra Gaiser (@AH_Gaiser) is senior counsel on the corporate engagement team at Alliance Defending Freedom (@ADFLegal).