An upcoming lawsuit over firearms filed against Wal-Mart could have big implications on the future of corporate governance.
New York City’s Trinity Church is suing Wal-Mart over not allowing shareholders to vote on a resolution related to gun sales, the Wall Street Journalreports.
The resolution also included other items Trinity deemed “offensive to family and community values.”
Trinity, a relatively small Wal-Mart shareholder, submitted a resolution in 2013 for shareholders to vote on whether or not the company should stop selling certain firearms, according to the Christian Post. Wal-Mart requested the Securities and Exchange Commission allow them to exclude the measure, and the SEC allowed it, leading Trinity to sue. The issue is expected to be heard in appeals court next month.
How that court decides, however, could have a major impact on the balance of power between corporations and their shareholders. From the Journal:
A district court sided with Trinity in November and said that Wal-Mart has to include the proposal on the corporate ballots it will send out this spring. Wal-Mart appealed, arguing that the shareholder resolution meddles in regular business decisions and is at odds with decades of guidance from the Securities and Exchange Commission that such affairs are off limits.
The gun issue is controversial. But it is the corporate-governance question that has elevated the case from a politicized dispute between the company and a tiny shareholder into one that has drawn widespread attention from prominent law professors and big-business groups. They hope the proposal will answer a question that rarely reaches the federal court system’s upper levels: How much influence should investors have over a company’s day-to-day operations?
Wal-Mart sells firearms at less than half of its stores in the U.S. In its most recent earnings report, Wal-Mart posted earnings-per-share of $5.07 and $485.7 billion in revenue for 2014.