Proxy season brings new shareholder battles

Spring is in the air, and American corporations are busy sending out proxy statements for shareholders to vote on at their annual meetings, which typically take place in April and May.

The weather may be lovely, but U.S. companies shouldn’t expect an easy time of it over the next two months. Early indications are that this year, shareholder advocacy groups are no less determined to effect change than in years gone by.

A total of 211 shareholder resolutions on social and environmental issues are pending for the spring 2005 proxy season, matching the record number of 210 such resolutions seen at the same point in 2004, according to data from the Investor Responsibility Research Center, a consulting and proxy services firm based in Washington.

"The day of the sleepy, passive investor is being left behind,” said Tim Smith, president of the non-profit Social Investment Forum and senior vice president of Walden Asset Management, a socially-responsive investment firm.

Target: Exxon Mobil
Big U.S. companies like Exxon Mobil, the largest U.S. company by stock valuation, are finding themselves in shareholder groups’ crosshairs.

This year, investor groups focusing on environmental issues are making the oil giant a prime target, with three resolutions backed by social investors expected to be on the company’s proxy statement at its May 25 annual shareholder meeting.

One resolution asks the company to publish scientific data on climate change, another asks Exxon to report on how it will meet the greenhouse gas reduction targets in countries in which it operates that have adopted the Kyoto Protocol. And a third asks the firm to seek independent members for its board of directors who have expertise in the oil and gas industry.

Additionally, the non-profit Civil Society Institute has launched a Web site that allows shareholders to send targeted e-mails encouraging their mutual funds to support global warming resolutions at the company.

Pam Solo, president of the Civil Society Institute, notes that as of last year, mutual funds are required to disclose to investors how they vote on proxy issues.

“We want people to speak up and hold mutual fund companies’ feet to the fire when it comes to Exxon Mobil,” Solo said. “The business community is most likely to change when it gets a clear message that consumers and investors demand action.”

The environment, and global warming in particular, is one of the top categories for shareholder resolutions this year. Other key shareholder issues include disclosure of political contributions, fair employment practices and animal welfare.

Shareholders on a roll
When it comes to global warming initiatives, shareholder groups are on a roll. Ecologically focused mutual funds and public pension funds in states like California, Connecticut and New York are joining in the drive to pressure big energy companies into releasing data on greenhouse emissions and showing how global warming regulations affect them financially.

Their message is simple: Climate change is not only an environmental issue, it’s also bad for the bottom line, and so companies have a fiduciary duty to shareholders to identify their risk and reduce their exposure.

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