It's that time of year when shareholders get their say - by
asking a question at a corporation's annual meeting or voting on
resolutions. But resolutions don't appear out of thin air. Corporate
officials and activist shareholders can spend months hashing over an
issue such as pollution or labor practices. For a peek at that
process, the Monitor's Laurent Belsie talked with Shelley Alpern,
director of social research and advocacy at Trillium Asset
Management, and Meredith Benton, research associate with Walden
Asset Management. Here is an edited transcript of their
What trends are you seeing in shareholder resolutions?
Ms. Benton: One of the most exciting trends we're seeing right
now is the level of responsiveness from the companies. They've gone
from being resistant or unaware ... to working with us.
Ms. Alpern: There's a lot of activity around climate change. Ten
years ago, companies could treat you like you were a little bit
crazy for bringing up the issue. But now, it's taken very seriously
as an economic issue.
Are there other trends?
Alpern: Political contributions have become a real issue over the
last couple of years. There's an outfit in Washington called the
Center for Political Accountability that has worked very closely
with a shareholder coalition to put resolutions on company ballots
that ask companies to disclose the kinds of contributions they're
making. Although there's some kind of public disclosure already
required by government, it doesn't tell the whole story.
Are you telling companies who to contribute to?
Alpern: No. At this point, we just want to know what they are
doing and how they are handling the risks associated with political
giving - the reputation risks when they might find out that some of
their money has been diverted to some candidate or political
independent 527 [group] whose views would alienate their employees,
their customers, or their shareholders.
How do you work with a company to persuade it to do something?
Benton: The process begins when there's an issue of concern for
our clients. We look at what the issue is and how it may impact the
companies in our portfolio. Once we've determined what that impact
might be and believe there's a long-term business case for why one
of our companies should be concerned about the issue, we approach
the company. We say, as an example, "We're concerned that your
nondiscrimination policy doesn't include sexual orientation. We
believe that this is something you should pay attention to because
you're not going to be able to attract the best employees. You may
be alienating your customer base. You may be breaking local laws
depending on where your operations are."
Then what happens?
Benton: They have a couple different ways they can respond to us.
They can ignore us, which happens sometimes. They can constructively
engage with us and sit down with us. If they're ignoring us or
strongly disagreeing with our viewpoint, we have one more option,
which is the shareholder resolution.
So you'd prefer not to get to the resolution stage. …