The 2003 Shareholder Advocacy Campaign

Over the last five years, Responsible Wealth members have introduced more than 50 shareholder resolutions calling upon corporations to examine and change their executive compensation practices. In a few cases, companies have accepted our suggestions and changed their policies. In most cases, our resolutions have been printed in proxy statements that are sent to millions of shareholders, then presented and voted on at the annual meeting. We believe that shareholder resolutions are a valuable tool for education and social change.

This year, we will be filing resolutions at the following companies:

Comprehensive Executive Compensation Review

In a widely publicized 9/11 memorial speech, New York Federal Reserve President William McDonough harshly criticized excessive CEO pay and called upon companies to voluntarily adopt reforms to limit out-of-control pay packages. Responsible Wealth has been directly addressing these issues since 1999. In the past, we have addressed piecemeal pay reforms, such as freezing pay during periods of downsizing, or establishing a maximum ratio between highest and lowest paid employees. Our resolutions this year will call for comprehensive reviews that include consideration of the above possible reforms as well as such things as limiting the concentration of stock options in executives’ hands and submitting large severance packages for a shareholder vote.

• Bristol-Myers Squibb
  Institutional Co-Filers: Northstar Asset Management, Catholic Equity Fund

• Coca-Cola
  Institutional Co-Filer: Northstar Asset Management, Catholic Equity Fund

• Disney

• EMC Corporation
  Institutional Lead Filer: Catholic Equity Fund
  

• General Electric
  Institutional Co-Filers: Northstar Asset Management, Catholic Equity Fund, Trillium Asset Management

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Link CEO Pay to Reducing Predatory Lending

The sub-prime lending industry, the dominant financial service provider in low income communities and among people of color and the elderly, has been the fastest growing part of the financial services industry. Fair housing activists have identified several abusive lending practices, termed "predatory lending." Among these practices are: charging excessive interest rates relative to the credit risk of the borrower, excessive fees, significant pre-payment penalties (a practice virtually eliminated in conventional mortgage markets), and aggressive marketing practices that result in loan-flipping. The Coalition for Responsible Lending estimates that predatory practices cost borrowers $9 billion a year. Several states have adopted laws restricting lending practices deemed abusive. Responsible Wealth is working with ACORN, Self-Help Credit Union and The Greenlining Institute, three leaders in the fight against predatory lending, in filing these resolutions.

• Citigroup
  Partners: Self-Help Credit Union, Coalition for Responsible Lending, The Greenlining Institute
  Institutional Co-Filers: Advocacy Fund, Northstar Asset Management, Trillium Asset Management

• Household International
  Partner: ACORN
  Institutional Lead Filer: Northstar Asset Management
  Institutional Co-Filer: Domini Social Investments

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Competitive Board Elections

One of the most pervasive myths in corporate America is that shareholders elect the Board. We know of no public company in America that puts up more Board nominees than there are seats to be filled. We have people leading businesses that are often engaged in intense competition while those leaders themselves are unwilling to compete for their positions. We believe such problems as runaway CEO pay, and difficulties with employee relations, environmental management, and human rights controversies often have a common thread – who is at the table in the corporate board room. Many corporate boards are dominated by company insiders and people who are themselves CEOs of businesses. Today’s multinational businesses operate at the complex intersection of many stakeholder interests. This resolution seeks to give shareholders real choice in electing directors, including the choice of directors with different backgrounds and areas of expertise.

• Exxon Mobil
  Institutional Co-Filer: Northstar Asset Management

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Report on Corporate Taxes

Over the last four decades corporate tax rates have steadily declined. In the 1950s, corporate income taxes contributed one-third of the federal budget. This year, corporate taxes will comprise less than one-fifth of the federal budget. Corporate tax breaks and govenment subsidies vary widely, even within industries. For instance, Coca-Cola’s tax rate is more than twice that of arch-rival Pepsico. Corporate tax disclosure in SEC-mandated reports is often difficult to understand even for seasoned analysts. Our resolutions in this area ask for greater tax reporting transparency through publication of a special report listing each tax break worth $5 million or more. We believe this information will be useful in many ways, including ascertaining whether CEOs are being compensated more for sucessful tax avoidance strategies or for developing innovative products and superior customer service.

• Pepsico
  Institutional Co-Filer: Northstar Asset Management

• Pfizer
  Institutional Co-Filer: Northstar Asset Management

• Raytheon

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Disclosure of Proxy Voting by Mutual Funds

Mutual funds play a substantial role in corporate governance since they control 19% of the equities in the stock market. Each day the nation’s mutual funds are voting on such matters as the election of corporate directors, approval of CEO pay packages, appointment of independent auditiors, whether to reincorporate firms in offshore tax-havens, and much more. Unfortunately fewer than three dozen of the nation’s more than 8,000 mutual funds will disclose to their investors their proxy voting policies and voting records. Our resolutions ask that mutual funds embrace greater transparency and begin to disclose their proxy voting activities to their customers.

• Fidelity Magellan Fund

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