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May 07, 2024

Paramount shareholders to vote on NYC’s AI proposal

Resolution includes request for information on board oversight

Investors in Paramount Global will vote at the company’s June 4 AGM on a proposal seeking disclosures around AI and board oversight of the technology.

The resolution was filed by New York City Comptroller Brad Lander, who is custodian for the city’s public pension funds. Those funds have a total of more than $271 bn in assets under management.

The proposal requests that Paramount ‘prepare and publicly disclose on the company’s website a transparency report that explains [its] use of [AI] in its business operations and the board’s role in overseeing AI usage, and sets forth any ethical guidelines the company has adopted regarding its use of AI.’

The comptroller’s office writes in a supporting statement: ‘The use of AI by large corporations raises significant social policy concerns. These include but are not limited to: potential discrimination or bias in employment decisions; mass layoffs due to job automation; facility closures; the disclosure and misuse of private data; and the creation of ‘deep fake’ media content that may disseminate false information. These concerns pose risks to the general public and to long-term investors [in] the company, who are impacted by the company’s reputation as well as its financial position.’

Providing transparency about Paramount’s use of AI and any ethical guidelines governing that use would aid the company by addressing public concerns about the technology and by ‘strengthening the company’s position and reputation as a responsible, trustworthy and sustainable leader in its industry,’ the supporting statement reads. ‘With a transparency report, the company could establish that it uses AI in a safe, responsible and ethical manner that complements the work of its employees and values the public.’

Segal Marco Advisors filed similar proposals about the use of AI at Apple and The Walt Disney company this year. The resolution at Apple requested that the company ‘prepare a transparency report on [its] use of [AI] in its business operations and disclose any ethical guidelines the company has adopted regarding [its] use of AI technology.’ It was backed by 37.5 percent of the votes cast at Apple’s AGM.

In Disney’s case, the resolution did not feature in its proxy statement.

Company opposition
Paramount is calling for shareholders to vote against the proposal. The board writes in this year’s proxy statement that the company has a ‘robust’ risk-management program that oversees information technology matters, including risks related to AI, and that senior management from divisions such as legal and information technology work together to identify, assess and mitigate ethical, legal and reputational risks associated with the company’s use of AI.

‘The report requested by the proposal is unreasonably broad, implementation of the proposal would be overly burdensome for the company and use significant resources, and the report would include extensive detail about complex and confidential matters, all without any material incremental benefit to stockholders,’ the board writes.

‘We have ethical guidelines under which all of our operations are conducted, as well as fulsome existing disclosures regarding our information technology risk oversight controls and the board’s role in overseeing our use of AI, rendering the report requested by the proposal unnecessary.’

In addition, the board notes that regulators are preparing rules to address AI and the report requested in the proposal ‘may conflict with anticipated regulations surrounding the company’s use of AI, rendering [the resolution] premature.’

A Paramount spokesperson had no additional comment.

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...