News Archive: April 2010

ProxyDemocracy News

April 19, 2010 at 12:06 PM

ProxyDemocracy concludes our series on social and environmental issues appearing on proxy ballots with this article on sustainability reporting. The coverage was provided by the Sustainable Investments Institute.

April 16, 2010 at 11:25 AM

ProxyDemocracy continues its coverage of social and environmental issues appearing on proxy ballots in 2010 with this installment on labor rights. More than 30 resolutions have been introduced this year on matters such as sweatshop labor and the disparity in pay between executives and lower-wage workers. The series was produced by the Sustainable Investments Institute.

April 15, 2010 at 11:04 AM

Lance E. Lindblom and Laura Shaffer of the Nathan Cummings Foundation argue in the New York Times that huge paychecks for top corporate executives are out of whack with reality -- especially at Goldman Sachs Group Inc.

April 14, 2010 at 17:05 PM

As part of ProxyDemocracy’s series on social and environmental issues in the 2010 voting season, we examine industrialized food production. The Sustainable Investments Institute (SI2), a research center based in Washington, produced the series.

April 12, 2010 at 09:45 AM

Proxy Preview 2010 has been published by the As You Sow Foundation. The report describes social and environmental shareholder proposals under consideration in the current proxy season and provides useful resources for investors and voters.

April 5, 2010 at 15:45 PM

ProxyDemocracy earned a citation as a fund-industry watchdog from the Wall Street Journal, while money managers themselves got a demerit for failing to keep an eye on corporate excesses.

Around the Web

The throng of people attending Berkshire Hathaway Inc,'s annual meeting will grow again this year in the wake of the company's first stock split and its acquisition of the nation's second-largest railroad.

In a rally led by the AFL-CIO, protesters will march on Wall Street, calling for accountability, the creation of jobs and improved lending practices. Organizers expect 10,000 protesters to assemble.

Bank shareholders are showing a bit of gumption. Investors at PNC Financial Services Group Inc. and Bank of America Corp. voted to trim the sails of corporate insiders.

Support for a say-on-pay proposal at DuPont Co. may be fading, as shareholders again rejected a nonbinding vote at the company's annual meeting. The measure, opposed by DuPont, received about 45 percent of the votes cast, with 55 percent of the ballots against. The vote last year was 53 percent against, and 46 percent in favor.

Giving shareholders more power over corporate boards scares Wall Street about as much as anything else in the bank reform bill. It probably should, writes Craig Crawford. And its fate in this week’s Senate negotiations will say a lot about how much Democrats are willing to compromise.

About 38 percent of shares voted against an advisory resolution on American Express Co.'s pay practices. It was the first major display of investor dissent on a management-sponsored pay vote this season. Later, at Wells Fargo & Co., 27 percent of shares opposed a proposal on compensation.

A first-time shareholder resolution asking Coca-Cola Co. to report on the safety of a chemical used to line beverage cans gained 22 percent of the vote. Twenty-six percent of shares favored a proposal calling on MDU Resources Group Inc. to report on the environmental and health hazards associated with coal ash practices.

Thirty-nine percent of Bank of America Corp. shares were cast in favor of a derivatives disclosure resolution sponsored by members of the Interfaith Center on Corporate Responsibility. An item on Citigroup Inc.'s ballot last week won 30 percent support.

Bank of America Corp. shareholders defeated all but one of seven investor-sponsored proposals at the company's annual meeting. They approved a resolution to allow shareholders with a 10 percent holding in the bank to call a special meeting. Shareholders also approved the bank's 13 board nominees.

The Securities and Exchange Commission has shed more light this year on its rulings to include or exclude shareholder proposals on environmental and social issues from corporate proxy statements.

Four proposals sponsored by shareholders of Wells Fargo & Co. were defeated at the company's annual meeting. Each of four management resolutions passed, including increasing the authorized share count and approving executive pay, and all 16 board members were retained.

Shareholders of PNC Financial Services Group approved two of three proposals giving them limited say over executive compensation at their annual meeting.

The California Public Employees' Retirement System is opposing the reelection of six Bank of America directors for failing to fully disclose the financial condition of Merrill Lynch before the controversial merger in 2008. CalPERS will cast withhold votes from Frank Bramble, Virgis Colbert, Charles Gifford, Monica Lozano, Thomas May and Charles Rossotti.

If the annual proxy season makes you yawn, you aren't alone. Only a small percentage of shareholders actually bother to cast a vote for company directors, shareholder resolutions and other matters brought before them. You may want to reconsider your ennui this year, writes Karen Blumenthal.

Institutional investors have a lot of clout if they choose to act, writes Roger W. Ferguson, chief executive officer of TIAA-CREF. Pension funds and investment and insurance firms are the largest group of investors in U.S. companies, holding more than 40 percent of outstanding equity of publicly traded firms. They should do more to protect investors' long-term interests.

The Securities and Exchange Commission Investor Advisory Committee, whose members include ProxyDemocracy director Mark Latham, will meet May 17 in Washington. The agenda will include an update on issues involved in financial reform legislation. Written comments are being accepoted until May 10.

External auditors must be approved by shareholders. The auditor's primary role is to express an opinion on whether a company’s financial statements are free of material misstatements. Over the last 10 years, auditor fees in many instances have skyrocketed. Herein lies the problem, writes John Richardson, editor of ProxyAnalyst.

A big hurdle to better corporate governance policies at public companies is that many large institutional shareholders -- including mutual fund families -- don't take a leadership role in pushing corporate managements when it's necessary. ProxyDemocracy is a good source for individuals seeking to check up on mutual funds' proxy voting records.

Financial-reform legislation isn't all about banks. Calls to make it easier for shareholders to nominate board directors could affect all publicly traded companies. But it still is too early for shareholders to think they are within sight of greater boardroom democracy. Companies generally oppose measures requiring greater say on pay and proxy access. 

Shareholders are perpetually the underdog when they try to stand up to a company. But the financial crisis could bring them more power.

The U.S. Senate is debating the proposed overhaul of the nation’s financial regulatory system, which President Obama promoted in a speech in New York. Several provisions in the legislation could affect individual investors, including potential reforms of corporate governance and proxy access.

Pfizer Inc. shareholders overwhelmingly rejected a proposal to stop giving top executives stock options, but the company's CEO took some heat over that issue at its annual meeting. Investors did give themselves an advisory vote on executive compensation, with 97 percent of ballots cast supporting the idea.

Shareholders of health care giant Johnson & Johnson narrowly rejected a proposal to give themselves a say on pay of top executives, but the close vote -- 52 percent against and 48 percent for -- might not be final.

Five of 16 board members seeking reelection next week at Wells Fargo & Co. have personal or business ties to the bank. One director's son works for the company, making more than $700,000 last year. While there's nothing illegal about these associations, the perceived coziness between boards and the companies they oversee have been a key theme of the nation's financial crisis.

Supermajority rules at Eli Lilly & Co. blocked reforms backed by management and most investors for the fourth straight year. The Lilly Endowment, the company's largest shareholder, with a 12 percent stake, appears to have opposed the proposals.

Fifth Third Bancorp stockholders rejected a company proposal to change voting in election of board of directors at the bank's annual shareholder meeting. In addition, 92 percent of shares were voted in favor of the pay packages for top executives, while one-third supported a measure to split the chief executive officer's and chairman's roles.

The Service Employees International Union plans demonstrations in six U.S. cities next week to protest bank executive compensation. The rallies are set for Chicago; Charlotte, North Carolina; Kansas City, Missouri; Los Angeles; New York; and San Francisco.

A resolution for EQT Corp. to adopt majority voting won most of the votes tallied at the company's annual meeting despite management opposition. The proposal sought to amend EQT's governing documents so board nominees would be elected by the majority of votes cast at an annual meeting. A nominee may now be elected by a plurality of votes.

Washington Mutual Inc. shareholders won the right to try to hold an annual meeting so they can replace the board of directors of the company, the bankrupt former parent of biggest U.S. bank to fail.

Shareholders of American Express Co. and Wells Fargo & Co. are being urged to vote against ratifying the companies’ executive compensation in nonbinding proposals submitted by the $850 million AFSCME Employees Pension Plan.

What did the nun say to the banker? Do a better job of disclosing your over-the-counter derivatives market risk. It's not a joke. In the next month and a half, at corporate annual meetings, shareholders will vote on hundreds of proposals put forward by religious organizations, environmental groups and institutional and individual investors.

The first shareholder resolution on the chemical bisphenol-A, known as BPA, received 22 percent of the vote from shareholders of Coca-Cola Co. BPA has been found capable of leaching into liquids when used containers like plastic bottles, and the Food and Drug Administration expressed concern that it could cause health problems.

The U.S. Treasury Department copped out by agreeing to vote in the same proportion as other shareholders on ballot items at Citigroup Inc., writes James McRitchie of CorpGov.Net. A proposal by the Interfaith Center for Corporate Responsibility, urging greater derivatives disclosure, won 30 percent support.

The U.S. Treasury Department voted the 7.7 billion shares it owns in Citigroup Inc. at the bank's annual meeting, including for a proposal to have a reverse share split. The Treasury backed all 15 of the Citigroup directors who were nominated and voted proportionally on a say-on-pay resolution.

The U.S. House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises will hold an April 21 hearing on corporate governance and shareholder empowerment.

Laura Shaffer, director of shareholder activities at the Nathan Cummings Foundation, is hoping the second time's the charm when it comes to the grantmaker's efforts to have oil refiner, Valero Energy Corp., disclose its contributions to trade associations.

The AFL-CIO is calling on investors to vote against the pay practices of six large financial firms. Bank of America Corp., Citigroup Inc., Wells Fargo & Co, Morgan Stanley, JPMorgan Chase & Co.and Goldman Sachs Group Inc. will hold advisory votes on executive compensation in the next six weeks.

Weyerhaeuser Co. shareholders increased their power over management when they passed a proposal to give major stakeholders the right to convene special meetings.

The board of directors of McDonald’s Corp. has recommended that shareholders vote against a proposal to require that 5 percent of the eggs purchased for the chain’s U.S. restaurants be the cage-free variety.

Senator Bob Corker, a Republican from Tennessee, met with U.S. Securities and Exchange Commission Chairman Mary Schapiro about the SEC's proposal to give shareholders easier access to corporate voting. That may be a sign Republicans could bend on one of the key sticking points in the Senate financial overhaul bill.

The Restoring American Financial Stability Act of 2009 makes some cautious but important recommendations about compensation, writes Thomas F. Cooley of New York University.

Denny's Corp. is telling shareholders that investors waging a proxy fight are doing so for their own gain and don't have the company's interest in mind. The investors, who call themselves the Committee to Enhance Denny's, sent a letter to shareholders criticizing the restaurant chain's "culture of wasteful spending" and loss of customers to competitor IHOP.

Shareholder proposals have been filed at four companies over oils sands extraction in Canada, considered responsible for increasing greehouse gas emissions and causing other environmental damage. The companies are ExxonMobil Corp., BP Plc, Royal Dutch Shell Plc and ConocoPhillips.

The nation’s biggest banks helped create the current financial crisis that required a $700 billion taxpayer bailout. The banks paid out a record $145 billion in total compensation in 2009 and are spending millions of dollars lobbying on financial regulations, including limits on executive pay.

Shareholders of Bank of New York Mellon Corp. adopted a proposal to rein in "golden parachutes" for executives. The resolution advises -- but does not require -- the board of directors to limit severance payments to less than three times an executive's salary plus bonus, unless approved by shareholders.

Congress will soon take up its latest daunting legislative battle: rewriting the rules of the American financial system. Among its provisions, the reform bill written by U.S. Senator Christopher Dodd would give shareholders an advisory vote on executive compensation. The say-on-pay proposal has already come under heavy fire from Wall Street.

Waddell & Reed Financial Inc. sent a letter to shareholders that said an investor-sponsored advisory vote on pay would put the company at a "serious competitive disadvantage." In a vote April 7, the say-on-pay proposal failed and William L. Rogers, a member of the compensation committee, was reelected.

A coalition of labor unions and liberal interest groups are taking to the streets in a number of demonstrations against Wall Street as the fight over financial reform heats up in Washington. The groups are planning protests outside the annual meetings of several big banks.

More executives are switching from running public companies to activist boardroom roles where they can oust executives who run other public companies. About 24 percent of 213 dissident nominees in 2009 contests had held top management roles at a public company, up from nearly 22 percent of 73 such candidates in 2004.

A U.S. Court of Appeals vacated a Federal Communications Commission censure of Comcast Corp. for delaying file transfers by subscribers using peer-to-peer software. Activists received a setback when the Securities and Exchange Commission excluded a number of proposals addressing net neutrality, on the grounds of ordinary business.

Saying WellPoint Inc. has failed to live up to its commitment to provide “the best healthcare value” for customers, three shareholders of the Indianapolis-based health insurance giant want it to convert to a not-for-profit organization.

The Teamsters labor union urged Coca-Cola Co. investors to support its third shareholder proposal calling for the world's largest soft drink maker to separate the roles of chairman and chief executive officer.

Waddell & Reed Financial Inc. investors will consider a proposal today that seeks an annual advisory vote on executive pay. The company has taken the unusual step of including a special solicitation with its proxy statement to oppose the proposal. The sponsors include the California State Teachers' Retirement System and Calvert Asset Management.

The As You Sow Foundation and Northwest & Ethical Investments submitted a proposal asking Google Inc. to adopt principles for online advertising that go beyond its current policy and address the collection of "sensitive information about health, finances, ethnicity" and other issues for the purpose of behavioral advertising.

Zions Bancorp isn't doing enough to protect gay, lesbian and transgender employees from discrimination, investor groups led by the New York City comptroller say. The Utah company's board is urging shareholders to vote against the groups' anti-bias proxy proposal, saying current policies already achieve the investors' objectives.

Lions Gate Entertainment carved out a niche in Hollywood as a maverick that went up against the big studios. Now its own independence is at stake.

Shareholders of Kohl's Corp. will vote on two investor-proposed changes in corporate governance at the annual meeting May 13. One ballot item asks that the company's chairman be an independent director. The other would change voting rules to require a simple majority of ballots cast. Kohl's board opposes both initiatives.

Federal pay czar Kenneth Feinberg’s proposals weren’t the only compensation-related issues that might have disturbed an executive’s sleep. On Capitol Hill, Democrats are mulling reforms that would require public companies to give shareholders an annual say-on-pay vote.

Heading into an annual proxy season bristling with investor anger over executive salaries, some companies are working overtime to silence sensitive shareholder resolutions. Ever protective of the proxy process, companies are getting more aggressive this year, say attorneys and advocates on both sides of the contests, a view backed by data on challenges.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. aren’t doing “God’s work” when it comes to derivatives, according to investor groups of nuns and priests. Shareholders will vote on proposals sponsored by the Sisters of Charity of Saint Elizabeth and 14 other religious organizations, asking Goldman Sachs, JPMorgan, Citigroup Inc. and Bank of America Corp. to give more information on the collateral used in their derivatives trading.

A U.S. Supreme Court decision in January allowed corporations to tap their treasuries to support or attack candidates for federal office. Shareholder groups are rushing to make sure it doesn't bring a flood of corporate money into politics. The timing of the ruling forced some investors to turn to uncommon methods to curb corporate donations.

Activist shareholders are calling for the disclosure of political and charitable donations by public companies. Investor proposals on donations are on the table at more than 30 companies, including Goldman Sachs Group Inc., Ford Motor Co. and Boeing Co.

While they are not yet mandatory, say-on-pay provisions are being adopted by a growing number of companies. In 2008, only six companies agreed to give shareholders an advisory vote on executive compensation; more than 50 plan votes this year or next. Exactly which form of say-on-pay to put up for a vote, however, remains a matter of debate.

As public companies begin to disclose last year's bonuses ahead of annual shareholder meetings, it is becoming clear that many are paying executives in ways that federal officials worry will not discourage excessive short-term risk-taking.