Podcast Summary: Shareholder Primacy

Episode: Precatory proposal at BJ, activism at SNAP
Hosts: Mike Levin (activist investor), Ann Lipton (Professor of Law, University of Colorado)
Date: April 8, 2026
Description: This episode examines two current examples of shareholder activism and the evolving strategies investors use in public companies: (1) a precatory ESG proposal at BJ's Wholesale and (2) challenges faced by activist investors at Snap Inc., a tightly-controlled dual-class company.

Overview

The episode covers two activist “situations”:

1. The mechanics and implications of a precatory ESG proposal at BJ's Wholesale (BJ), where a shareholder used a novel method to pressure the company into including a climate-related proposal on the AGM ballot.
2. The uphill battle facing activists at Snap Inc. (SNAP), where the dual-class share structure essentially disenfranchises all public shareholders, and activists must rely on public pressure rather than governance tools.

The hosts analyze the tactics and legal terrain in each case, emphasizing the interplay of securities law, shareholder rights, and emerging activist strategies.

1. Precatory Proposal at BJ's Wholesale (BJ)

Discussion begins at [02:13]

Background

• Proposal origin: Trillium Asset Management, an ESG-focused fund, submitted a shareholder proposal to BJ's Wholesale, requesting improved disclosure on greenhouse gas emissions and mitigation efforts.
• Type: Precatory (non-binding) proposal
  • “If it passed, BJ's could… decide to ignore it.” (A, [05:01])
• Trillium is notable as “one of the larger in terms of AUM assets under management activists or ESG type activists.” (A, [04:08])

Procedural Hurdles

• Ownership Rule Issue: Trillium initially failed to document share ownership correctly but later fixed this by supplying a custodian letter.
  • “They cured a procedural deficiency about share ownership.” (A, [06:13])
• SEC ‘No Objection’ Process: BJ tried to exclude the proposal, arguing it was ‘ordinary business’ under SEC rules. The SEC allowed BJ to omit the proposal (“the SEC wrote their three line letter saying we will not object” — A, [07:41]).
• Contrast: New York State Common Retirement Fund took the legal route by suing BJ to compel inclusion of a deforestation risk report. (B, [03:12])

Tactical Innovation: Threat of a Proxy Contest

• With the SEC route closed, Trillium “threatened to solicit proxies itself,” essentially threatening to run its own proposal-only proxy contest ([08:31]) — a rarely used but powerful activist tool.

• This method echoes the UMWA tactics at Warrior Met Coal: threatening a ballot contest for proposals (not directors). The core leverage: if big funds voted on the activist proxy card, it would deprive management of visibility into shareholder support and might even destabilize vote counts and quorum ([11:53]).

  “If people return the mineworker proxies, then Warrior Met ...wouldn’t necessarily even know if they had a quorum.” (B, [11:53])

• Trillium's strategy forced BJ to settle: “BJ agreed to just include the proposal” ([13:01]), without agreeing to implement it.

Strategic Analysis

• Effectiveness of the Threat: The hosts note this threat is increasingly credible and cheap (“the whole [UMWA] thing was going to cost them around $15,000” — A, [14:54]), allowing activist investors to pressure boards even without 14a-8 success.

• Universal Proxy: A key enabler is the new universal proxy rule, allowing shareholders to list both proposals and directors on their own ballots. There are calls from the business community to limit this power ([18:36]):

  “Already there are like squawks from the business community asking the SEC to amend... its rules to take this power away.” (B, [20:10])

• Limitations of the Win: The proposal will be on the ballot, but “it’s not like they agreed to implement the proposal,” and the hosts debate whether Trillium should have forced more ([15:43]):

  “This is where I’m saying Trillium let BJ’s off easy.” (A, [15:31])

• Larger Trend: The tactic presents a new tool for well-resourced activists as traditional shareholder rights channels get narrowed.

2. Activist Frustration at Snap Inc. (SNAP)

Discussion begins at [21:38]

Company Structure and Context

• Snap’s share structure is ultra-insulated: founders Evan Spiegel and Robert Murphy maintain 99% of the voting power via a three-class share system.
  • “Spiegel and Murphy control 99% of the votes. It is a completely controlled public company.” (A, [23:33])
• Most public shareholders (Fidelity, Vanguard, Tencent, etc.) have non-voting shares ([24:20]), and there’s “no shareholder meeting. They don’t even have an AGM.” ([25:05])
• SNAP stock is down 75% since its IPO, drastically underperforming peers ([25:59]).

Activist Approaches

• Activist Fund ‘Irenic’: Owns 2.5% economic interest (some by derivatives) and is launching a high-profile public campaign (website, presentations) to push for change ([27:18]).

  • They appeal to both economic interests (“Evan Spiegel and Robert Murphy would clearly benefit”) ([28:07]) and the professional pride or reputation of Snap's independent directors ([30:26]).

• Tools available: Conventional levers (board nominations, bylaw amendments) are unavailable since public shares have no votes; legal routes and SEC mechanisms are essentially closed ([28:47]).

• The only avenue is reputational/public pressure (“are they trying to embarrass or try to shame or something...?” — A, [28:47]).

The Role of Shame and Social Pressure

• The hosts discuss whether board reputational concerns might be a lever: “...if any of these directors read over the Irenic materials...they have only one choice, is to quit.” (A, [31:09])

• But even then, the founders can appoint new directors; “the question is, what’s the threshold of shame for Spiegel and Murphy?” (A, [32:02])

  “People who become that wealthy do not do it by saying, oh, I’ve got enough...they seem to want to maximize value.” (B, [32:05])

Precedent and Impact

• This is rare in controlled companies. Recent precedents:

  • Starboard’s campaign at Fox (dual class structure) — no governance change occurred, but some positive dialogue ([32:54]).
  • Blackwells’ successful push for founder-CEO ouster at Peloton ([33:23]).

• Motivation for Irenic: Could be partly for reputation: “...like, I want to make a big splash with some kind of high-profile-ish thing and...now my name’s out there.” (B, [35:55])

• Market response: SNAP stock up ~20% in a week on Irenic news ([36:31]).

Memorable Quotes & Key Insights

On the Efficacy of Precatory Proposals

• “It’s not the proposal part, it’s the precatory part...the vote can’t be binding. But they could have gotten them to settle, to implement.”
  — Mike Levin, [17:04]

On Universal Proxy’s Game-Changing Power

• “The only reason a proposal-only contest can even be run as a practical matter is because of universal proxy.”
  — Ann Lipton, [17:27]

On Limits of Activism at SNAP

• “Most activists, once they see a structure with this degree of control, are reluctant to pursue it for this kind of reason.”
  — Mike Levin, [35:44]

On the Business Community's Response

• “Already there are like squawks from the business community asking the SEC to amend...its rules to take this power away.”
  — Ann Lipton, [20:10]

On the Reality for SNAP Investors

• “If I were to go and buy SNAP shares, I would be buying non-voting shares.”
  — Ann Lipton, [24:25]

• “There’s no shareholder meeting. They don’t even have an AGM.”
  — Ann Lipton, [25:05]

Timestamps for Important Segments

• [02:13] — Introduction to the BJ’s Wholesale precatory proposal case
• [06:23] — Discussion of procedural requirements and BJ’s response
• [08:31] — Trillium’s escalation: threatening their own proxy solicitation
• [11:34] — Parallels to Warrior Met Coal UMWA campaign
• [18:14] — Universal proxy’s enabling effect on the new activism
• [20:10] — Pushback from the business community on universal proxy usage
• [21:38] — Start of Snap/activism discussion
• [23:54] — Explanation of Snap’s share structure and governance void
• [27:18] — Introduction to Irenic’s activist campaign
• [32:05] — Discussion: what would it take to move Spiegel/Murphy?
• [36:31] — Market response to activism at Snap

Takeaways

• Precatory proposals are being weaponized by credible threats of proposal-only proxy contests enabled by universal proxy rules.
• Even small, inexpensive activist efforts can prompt board action, especially if the threat is credible and the activism is institutionally resourced.
• Dual-class/controlled company activism is mainly a matter of wielding public/reputational levers, not legal/governance-remedial ones.
• Universal proxy rules are under attack by business groups seeking to stem this evolving activism trend.
• In companies like SNAP, public shareholders’ only real power is the bully pulpit and performance embarrassment; governance change is structurally locked out.
• Activist campaigns, even in these tough situations, can boost market optimism and raise fund profiles.

Hosts: Mike Levin and Ann Lipton
Produced by: Free Float Media Inc.