Shareholder Resolution Campaign
1999-2000

Wage Gap Resolutions

The growing economic divide in America has many faces. Throughout the 1990s, CEOs have enjoyed upward spiraling compensation while the pay of average workers has stagnated. Since 1990, average worker pay has increased 28%, just slightly more than inflation, while CEO pay rose 481%. The faces of women and people of color also reflect the widening pay gap. According to recent Census Bureau data, women earn just 74 cents for every dollar earned by a man.

Our resolutions seek to restore a corporate social fabric tattered by frequent downsizings and compensation policies that offer a few leaders boundless rewards, while undervaluing the contributions of the broader workforce.

This resolution asks that the company establish a maximum ratio between the pay of the CEO and the pay of the lowest paid worker. The resolution does not specify what the ratio should be, and instead asks the company to wrestle with this question and justify its response to shareholders. Though opponents of this resolution have argued it would cap CEO pay, this is not the case. CEOs would be able to earn more as the company's wage floor was raised. Criterion for selection: companies with large and growing disparities between CEOs and lowest paid workers.

• Honeywell

2. Freeze CEO Pay during Periods of Downsizing and Cost-Cutting

Despite record corporate profits during the 1990s, layoffs have continued at levels usually only seen during recessions. A study completed by the American Management Association concluded that fewer than half the companies that undertake restructuring activities, including employee downsizings, experience any improvement in earnings following the restructuring. Still, corporate executives have commonly received large compensation increases following cost-cutting announcements. We believe that in a shared enterprise, both rewards and sacrifices should be shared among all employees. A standard that increases the rewards to executives while asking all other employees to sacrifice leads to poor morale and related problems. This resolution calls for a pay and option freeze for executives in years when more than 5% of workforce or 1,000 employees are laid off.

• AT&T
• Fleet Boston Financial (resolution withdrawn)
• Huffy
• Raytheon

3. Pay Equity Report

While some women and people of color have successfully advanced into the leadership ranks of U.S. corporations, the experience of many women and people of color is that they continue to be paid significantly less than their male and white colleagues doing the same work. Pay discrimination has been illegal in America since 1973. Enforcement, however, has been lax. Initiatives by the Clinton Administration during the last two years have stepped up enforcement, opening pay discriminators to adverse publicity and legal liabilities. This resolution calls on companies to join other leadership companies and conduct pay equity audits to identify and correct pay equity violations.

• R.R. Donnelley

Wealth Gap Resolutions

Broadened Ownership

The pay gap between CEOs and the average American worker widened to 419:1 in 1998, according to Business Week. The largest factor in this wide gap has been the explosion of executive stock options. One means of bridging the economic divide is to increase the number of shares owned by employees. Several studies have concluded that firms with significant employee ownership grow faster and have lower turnover. A recent study by Hewitt Associates and the Kellogg School of Management at Northwestern found that between 1971 and 1991, companies with employee stock ownership plans (ESOPs) had total stock returns that averaged 6.9% higher in the four years after the ESOP was set up than similar firms without ESOPs.

Resolution asks the company to establish an employee stock ownership plan (ESOP) funded annually with an equivalent number of shares as are distributed to corporate officers (includes options, restricted stock and stock units).

• Citigroup (resolution omitted)
• Disney (resolution omitted)

Resolution asks the company to publish a report on employee ownership.

• American Home Products (resolution omitted)
• MBNA (resolution omitted)

Corporate Governance Reform

Real Elections

Corporate directors are charged with evaluating CEO performance and setting CEO pay packages. Unlike several other industrialized nations where boards are made up of directors representing diverse interests, U.S. boards are often comprised of peer CEOs. Thirty percent of S&P 500 firms had persons serving on board Compensation Committees who had conflicts of interest that could inhibit their independence, according to the Investor Responsibility Research Center. This resolution challenges the current director election system in which directors elect themselves, with shareholders being relegated to an affirming role. It also questions whether boards dominated by peer CEOs can overcome their inherent conflicts of interest and serve shareholders well in matters pertaining to CEO compensation. The resolution asks companies to adhere to American democratic tradition and put up more nominees for director than there are seats to be filled. In nominating additional directors, we call upon the companies to present candidates representing diverse interests, including the community and employees.

• American International Group

Corporate Power Resolutions

1. Report on Political Contributions and Lobbying Expenses

Campaign finance reform promises to be one of the major issues of the coming presidential campaign. Corporate political contributions and lobbying expenses have reached record levels. Shareholders have a right to know how their money is being spent. This resolution calls upon companies to publish a report listing lobbying expenses and political contributions (including unregulated soft money donations).

• General Electric
• Microsoft

2. Corporate Welfare Report

In an award-winning 1998 expos?, Time magazine reported that the federal government spends $125 billion a year on corporate welfare. This amount is equal to 26% of total after-tax corporate income in the U.S. It is also equivalent to the combined federal income taxes of 60 million Americans. There is growing pressure to end corporate welfare as we know it. On June 30, 1999, the House Budget Committee held hearings featuring speakers from across the political spectrum - ranging from Ralph Nader to representatives of the Heritage Foundation, and including a coalition of CEOs - all calling for substantive tightening of corporate welfare policies. Shareholders have the right to understand how much of their company's profits are tied to various public subsidies. This resolution asks companies to prepare a report outlining the various government subsidies, tax abatements, and below-market financing received.

• AT&T
• General Electric

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