Shareholder resolutions

1
Shareholder resolutions

• Professor Doug Cerf
• Donald Bren Graduate School of
• Environmental Science and Management
• Corporate Environmental Management (ESM 281)
• Winter 2009

2
Shareholder resolutions

• Shareholder resolutions are proposals submitted
  by stockholders for a vote at the company's
  annual meeting.
• Typically, resolutions are opposed by the
  corporation's management, hence the insistence
  for a vote.
• Regulated by the Securities and Exchange
  commission
• Common shareholder resolutions address
• corporate governance (e.g. executive
  compensation)
• corporate social responsibility (e.g. global
  warming, labor relations, human rights)

3
Shareholder resolutions

• Virtually all shareholder resolutions are
  non-binding
• more closely resembles a poll than it does a
  (binding) referendum.
• media attention helps shareholder resolutions if
  they receive a majority vote
• Pension funds get involved in submitting
  shareholder resolutions
• Second of the three Socially responsible
  investing strategies
• Strategy1 Investing in companies that meet
  certain social and/or environmental performance
  criteria
• Strategy 2 Using their rights as shareowners to
  encourage companies to be better corporate
  citizens, or
• Strategy 3 Allocating some of the funds assets
  for investment in disadvantaged urban and rural
  communities.

4
2008 GRI report on shareholder resolutions

• http//www.globalreporting.org/NewsEventsPress/Lat
  estNews/2008/NewsApril08Riskmetrics.htm  
• 392 proposals on social and environmental issues
• up 12 percent from just five years ago
• Withdrawals
• Another key measure of successfor both
  proponents interested in winning concessions from
  companies and from management eager to keep
  controversial public policy issues off the annual
  meeting agendais withdrawals. 
• Proponents have withdrawn 25 percent to 30
  percent of all proposals filed in the last five
  years.  

5
Examples

• Pension fund urges more climate risk disclosure
• http//www.enn.com/top_stories/article/24188
• Exxon facing shareholder revolt over approach to
  climate change (May 2008)
• http//www.guardian.co.uk/business/2008/may/19/exx
  onmobil.oil
• Calpers supports shareholder resolutions at Exxon
  Mobil
• Calpers is the largest pension fund in the US
• http//www.marketwatch.com/news/story/story.aspx?g
  uid88299a22-38da-40a1-97f4-3b23dabc7874

6
Examples

• A success
• Shareholders drop resolutions as Ford outlines
  emission plans (April 2008)
• http//www.businessgreen.com/business-green/news/2
  214103/shareholders-drop-resolutions
• A failed attempt
• Wal-Marts typical response to shareholder
  resolutions (May 2008)
• http//walmartwatch.com/blog/archives/wal_marts_ty
  pical_response_to_shareholder_resolutions/