2007 Shareholder Resolution Roundup
Gentle reader, we must hastily publish the results of this spring’s flurry of company annual meetings while we can still remember them accurately.
Most of our advocacy initiatives paid off very well. Surely not by coincidence, this year we happily integrated two new staff members into our Social Research & Advocacy Team, Julie Mackin, our administrative assistant, and Susan Baker Martin, a social research analyst. Susan was a portfolio manager for Trillium Asset Management Corp. (“Trillium”) for a number of years in the 1980’s and 90’s.
High Fives All Around
Apple Computer made our day on May 2 by announcing plans to completely eliminate the use of two classes of toxic chemicals, polyvinyl chlorides and brominated flame retardants, in its products by the end of 2008. We had filed a shareholder resolution singling out these two chemicals for Apple’s attention and environmental groups pressured Apple on the issue in an open letter to CEO Steven Jobs and board member Al Gore that attracted media notice. In response to Apple’s new commitment, we withdrew our resolution and congratulated Apple at its annual meeting in Cupertino.
American Express agreed to produce their first sustainability report describing their environmental policies and ecological footprint – and their corporate secretary gets points for noting correctly that Trillium is a type of flower. Late in May, we withdrew a resolution at Medtronic for the same reason. Corporate sustainability reports are typically dryer than the latest issue of Metals Week, and yet we’ve found repeatedly that the process of reporting on performance prods companies into improving their environmental and social policies and performance and makes them more accountable for continuing to improve over time.
Anadarko Petroleum agreed to establish an “intensity reduction target” in 2008 that will diminish greenhouse gas emissions per unit of output. ConocoPhillips became the first U.S. oil company to join the U.S. Climate Action Partnership, a coalition of ten corporations and four nonprofits that has called for a mandatory national framework to reduce greenhouse gas emissions by 60 to 80 percent by 2050. The company also announced additional investments in low-carbon fuels research, the incorporation of carbon costs into capital spending plans, and refinery efficiency reduction targets of 10 percent by 2012. We’re disappointed by the company’s lack of interest in zero-carbon energy sources, but this is a vast improvement from when we filed our first climate change resolution four years ago. After a meeting with Wells Fargo’s president and other top execs, we also withdrew a resolution that we’d co-filed with the Service Employees International Union (SEIU). The company had agreed to study how it can work with major business customers including agribusiness, utilities, and energy companies to mitigate the risks of climate change.
A proposal at ExxonMobil, which has long funded the contrarian musings of so-called climate change “skeptics,” received a strong message from shareholders who have finally had enough of the company’s belittling attitude toward global warming. Thirty-one percent voted in favor of a proposal urging the company to adopt quantitative goals for reducing total greenhouse gas emissions from its products and operations.
So many companies have agreed to disclose more detail on their political donations (nearly 35 since the shareholder campaign began in 2004), that it’s clear this is an Issue Whose Time Has Come. General Electric, American Electric Power, Hewlett Packard and Du Pont will be publishing a list of all of their political donation recipients from state and local candidates to 527 organizations (the type that made “swift-boating” a verb), as well as their gifts to trade associations that were used for political purposes. Partial progress and agreements to continue dialogue allowed for withdrawals at 3M and Dominion Resources. (Two political contributions resolutions, at Ford Motor and General Motors, were excluded for technical reasons.)
Finally, as much as it pains us to type the words “Cheney” and “sexual” in the same sentence, the Veep’s old company Halliburton agreed to add “sexual orientation” to its nondiscrimination statement. Votes on this issue at Expeditors and Pentair garnered 43 percent and 32 percent, respectively. At ExxonMobil, where we’ve not-so-patiently co-filed the same resolution for nearly a decade, the vote inched up a few notches to 38 percent.
The “say on (executive) pay” resolution that we co-filed with the American Federation of State, County and Municipal Employees (AFSCME) at Citigroup captured 43 percent of the vote, in the middle of the range of results received for this campaign this season. “Say on pay” proposals (discussed at greater length in the Winter 2006 IFBW) aim to temper outrageous senior pay packages by calling for management to solicit nonbinding votes from shareholders on their incentive structures. Discussions with Pfizer on “say on pay” will move forward next year in exchange for a withdrawal arranged by the lead filer of that resolution, Walden Asset Management.
In their spare time, Trillium Social Analyst Steve Lippman and Chief Investment Officer Adam Seitchik teamed with Daniel Rosan of the Interfaith Center on Corporate Responsibility to publish “Why Lower Drug Prices Benefit Institutional Investors: An Application of Universal Ownership Theory” in the May issue of Corporate Governance.1 The paper considers the net impact of cuts in drug prices on investor portfolios, arguing that while lower drug prices would cut into pharmaceutical company profits, the detriment to the investor would be largely if not fully offset by a combination of health plan cost-savings and increases in consumer spending power. Additionally, falling drug prices would benefit investors through the dynamic benefits from a healthier workforce with greater access to prescription drugs.
Still Pluggin’ Along
Granted, not every initiative we took resulted in celebratory champagne. Our resolution at Eli Lilly, co-filed with People for the Ethical Treatment of Animals, received only about 4% of the vote. We had asked the company to extend its animal welfare policies to include contract laboratories and to amend it to address animals’ social and behavioral needs. (Amgen, however, will be posting their animal policies on their web site after a little prodding from our firm.)
Our resolution at Chevron concerning their environmental legacies in Ecuador, Nigeria, Angola and Burma drew a disappointing 9%, but is eligible for resubmission for next year. This is true for our resolution at Dow Chemical concerning links between the company’s pesticides and asthma, which garnered about 7 percent.