Political spending and corporate money in politics is a highly contentious issue, made more prominent in light of the 2010 Citizens United Supreme Court case that affirmed companies’ rights to make unlimited political expenditures to independent groups. In the 2012 election year, we expect even more media and public attention to corporate spending to influence elections. Experts predict that an unprecedented amount of money will be spent in the 2012 election season.

Recent polls highlight the public’s disapproval. In a June 2010 Harris poll, 85% of voters said that corporations “have too much influence over the political system today….” In February 2010, an ABC News/Washington Post poll found that 80% opposed Citizens United, noting, “the bipartisan nature of these views is striking in these largely partisan times.”

Corporate political contributions can backfire on a corporation’s reputation and bottom line. In 2010, Target and Valero received unwanted attention, consumer boycotts, and protests for their support of controversial candidates and ballot measures. In a Harris Poll released in October 2010, a sizable portion (46)% of respondents indicated that if there were option, they would shop elsewhere if they learned that a business they patronized had contributed to a candidate or a cause that they oppose.

According to the Institute for Money in State Politics, Bank of America’s political spending on the state and federal levels totaled over $2.1 million in 2007-2008. However, this figure does not include payments to trade associations or other tax-exempt organizations that may channel corporate money to political ends.

Many trade associations that receive corporate contributions spend vast sums in electoral politics; these payments are not required to be disclosed. For example, the U.S. Chamber of Commerce pledged to spend between $50 and $75 million in the 2010 election season, and announced that it would work to unseat any member of Congress who voted for healthcare reform.  According to Public Citizen, only 32% of groups broadcasting electioneering communications in the 2010 primary season revealed the identities of donors in their Federal Election Commission filings, down from nearly 100 percent in the 2004 and 2006 cycles.

Increasingly, companies such as IBM, Colgate Palmolive, Wells Fargo and others are adopting policies prohibiting spending of political funds directly or indirectly to influence elections.

Given the risks and potential negative impact on shareholder value, the proponents believe Bank of America should adopt a policy to refrain from using treasury funds in the political process.

RESOLVED:

The shareholders request that the board of directors adopt a policy prohibiting the use of corporate funds for any political election or campaign.

SUPPORTING STATEMENT:

We believe this policy should include any direct or indirect contribution that is intended to influence the outcome of an election or referendum. It should also prohibit the use of trade associations or non-profit corporations from channeling our company’s contributions or membership dues to influence the outcome of any election or referendum.

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Income inequality is a growing problem in the United States.  According to the U.S. Census Bureau, in 2010, 46.2 million Americans lived in poverty—including more than 1 out of every 5 American children. (http://www.census.gov/hhes/www/poverty/data/ incpovhlth/2010/highlights.html)  Many in America’s once robust middle class are now struggling to make ends meet.  

While the bottom 99 percent of Americans face increasingly tough times, the share of income going to the top 1 percent, especially the top 0.1 percent, continues to grow.  An October 2011 report from the Congressional Budget Office found that in 1979, the top 1 percent received about the same share of income as the bottom 20 percent; in 2007 the top 1 percent received more income than the bottom 40 percent combined. (http://www.cbo.gov/ doc.cfm?index=12485)  According to the economist Joseph Stiglitz, the richest 1 percent of Americans now takes in nearly a quarter of our nation’s income. (http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105)

The compensation packages of Chief Executive Officers and other senior executives play a significant part in the growing income inequality in the United States.  A 2010 working paper by professors at Williams College and Indiana University, entitled “Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality”, found that executives, managers, supervisors, and financial professionals account for about 60 percent of the top 0.1 percent of income earners in recent years, and about 70 percent of the increase in the share of national income going to the top 0.1 percent. (http://ideas.repec.org/p/wil/wileco/2010-24.html)   

Growing income inequality and the level of senior executive compensation at JPMorgan Chase & Co.—the Company’s Chief Executive Officer was given $20.8 million in total compensation for 2010, roughly 420 times the real median household income in 2010—combined with its perceived role in the 2008 financial crisis, has focused public ire on the Company. (http://www.census.gov/newsroom/releases/archives/income_wealth/ cb11-157.html)  The Occupy movement, with its focus on the inequalities between the extreme wealth of the top 1 percent and the struggles of the other 99 percent of society, held demonstrations outside of our Company’s offices.  Our Company has also been a primary focus of the Move Your Money project, a campaign that aims to encourage divestment from Wall Street banks. (http://moveyourmoneyproject.org/our-story)    

A Watson Wyatt survey conducted before the 2008 financial crisis found that 85 percent of institutional investors believed that the prevalent executive compensation system in the United States was damaging to Corporate America’s image.  A separate Watson Wyatt survey of 50 directors serving on corporate boards found that 61 percent believed that most executives were dramatically overpaid and 79 percent believed the executive pay model had damaged Corporate America’s image. (http://www.watsonwyatt.com/render.asp?catid=1&id=16180)  

RESOLVED: Shareholders request that a committee of independent directors of the Board assess how the Company is responding to risks, including reputational risks, associated with the high levels of senior executive compensation at our firm and report to shareholders (at reasonable cost and omitting proprietary information) by December 31, 2012.v

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Political spending and corporate money in politics is a highly contentious issue, made more prominent in light of the 2010 Citizens United Supreme Court case that affirmed companies’ rights to make unlimited political expenditures to independent groups. In the 2012 election year, we expect even more media and public attention to corporate spending to influence elections. Experts predict that an unprecedented amount of money will be spent in the 2012 election season.

Recent polls highlight the public’s disapproval. In a June 2010 Harris poll, 85% of voters said that corporations “have too much influence over the political system today….” In February 2010, an ABC News/Washington Post poll found that 80% opposed Citizens United, noting, “the bipartisan nature of these views is striking in these largely partisan times.”

Corporate political contributions can backfire on a corporation’s reputation and bottom line  In a Harris Poll released in October 2010, a sizable portion (46)% of respondents indicated that if there were option, they would shop elsewhere if they learned that a business they patronized had contributed to a candidate or a cause that they oppose. In 2010, Target Corporation was subjected to consumer boycotts, and protests for their support of a controversial candidate whom 3M also supported.

According to the Center for Political Accountability, 3M has spent approximately $1.5 million in corporate funds to political activities since 2002. However, this figure does not include payments to trade associations or other tax-exempt organizations that may channel corporate money to political ends.

Many trade associations that receive corporate contributions spend vast sums in electoral politics; these payments are not required to be disclosed. For example, the U.S. Chamber of Commerce pledged to spend between $50 and $75 million in the 2010 election season, and announced that it would work to unseat any member of Congress who voted for healthcare reform.  According to Public Citizen, only 32% of groups broadcasting electioneering communications in the 2010 primary season revealed the identities of donors in their Federal Election Commission filings, down from nearly 100 percent in the 2004 and 2006 cycles.

Increasingly, companies such as IBM, Colgate Palmolive, Wells Fargo and others are adopting

policies prohibiting spending of political funds directly or indirectly to influence elections.

Given the risks and potential negative impact on shareholder value, the proponents believe 3M should adopt a policy to refrain from using treasury funds in the political process.

RESOLVED:

The shareholders request that the board of directors adopt a policy prohibiting the use of corporate funds for any political election or campaign.

SUPPORTING STATEMENT:

We believe this policy should include any direct or indirect contribution that is intended to influence the outcome of an election or referendum. It should also prohibit the use of trade associations or non-profit corporations from channeling our company’s contributions or membership dues to influence the outcome of any election or referendum.

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Dear members,

In a widely anticipated three-two vote along party lines, the Securities and Exchange Commission (SEC) today enacted a new rule 14a-11 granting shareholder access to the proxy, following more than three decades of debate.  The new rule, however, includes some significant changes from the draft rule the SEC posted on June 10, 2009, which received more than 600 comments.  The biggest change is on ownership thresholds and holding requirements. The ownership thresholds, originally 1 percent for large-cap, 3 percent for mid-cap, and 5 percent for the smallest issuers, have been changed to a uniform 3 percent ownership requirement across the board.  In addition, holding requirements have been increased from one to three years.  For the smallest companies, the rule will not come into effect for three years.  The delay for the smallest issuers is to allow them and the commission to see how the rule plays out at larger companies to see if the rule needs to be changed.    

Shareholders will be limited to a total number of nominees not to exceed 25 percent of the board at any given company and cannot be nominating with intent to take over the company or control of the board.  Shareholders will be able to pool assets and can include securities loaned to a third party as long as they can be called back.  Securities sold, shorted or not held through the company’s annual meeting would need to be deducted from the qualifying ownership threshold.  The shareholder or shareowner group will need to file a Schedule 14-N on Edgar to notify the issuer of its or their intent to use the proxy access rule not earlier than 150 but no later than 120 days before the anniversary of the filing of the company’s last year’s proxy statement.  The nominee’s statement is restricted to 500 words.  There will be a no-action process for companies to challenge whether they need to include a director nominee in their proxy statement. 

The new rule creates a federal proxy access rule that sets a minimum threshold right of access for state law and deems proxy access a fundamental shareholder right.  States and companies with more liberal proxy access rules are permitted to keep these requirements.  The SEC was granted clear authority to proceed with a proxy access rule by the Dodd-Frank Wall Street Reform and Consumer Protection Act.     

Chairman Mary L. Schapiro said, enactment of the rule is essential because, “As a matter of fairness and accountability, long-term significant shareholders should have a means of nominating candidates to the boards of the companies that they own—candidates that all shareholder-voters may then consider alongside those who are nominated by the incumbent board.”  She added, “Nominating a director candidate is not the same as electing a candidate to the board.  I have great faith in the collective wisdom of shareholders to determine which competing candidates will best fulfill the responsibilities of serving as a director.  To me, the critical point is that shareholders have the ability to make this choice.”

Commissioner Elisse B. Walter says it reflects “a balanced approach to the comments received” and “sound judgment.”  Walter also said, “The financial crisis has taught us that the status quo is not good enough,” and that proxy access “is a necessary step to restore confidence to markets” and to “bring fair corporate suffrage into the 21^st century.”   

Commissioner Luis A. Aguilar said the new rule reflects “extensive research on appropriate ownership thresholds” and an exhaustive process that included three public roundtables since the last proxy access rule was proposed in 2003.  

Commissioner Kathleen L. Casey believes the rule will lie in the “pantheon of SEC’s poor decisions” next to, among other decisions, “recent interpretive guidance related to climate change disclosure.”  Casey views the rule as “fundamentally flawed” and “will have difficulty surviving judicial scrutiny.”  If it does, she says, it will end up overburdening the SEC with complaints and inquiries and inflict “significant harm to our economy and capital markets.”  She added that the SEC should have dealt with proxy access first.     

Commissioner Paredes says his vote against the rule reflects his belief that it “forces a universal governance scheme on all companies…a one size fits all mandate…that prevents companies to tailor rules to the individual attributes and qualities” of the company.  He says the move is “ill advised.”

The new rule is effective 60 days after publication in the federal register.   

My best,

Peter DeSimone
Director of Programs
Social Investment Forum

Visit http://www.socialinvest.org.

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STRONG SUPPORT FROM CHEVRON SHAREHOLDERS FOR PROPOSAL TO STRENGTHEN DIRECTORS’ ENVIRONMENTAL EXPERTISE

May 26, 2010, Houston – The proponents of a stockholder proposal at Chevron Corporation seeking greater board environmental expertise hailed the 27% in support it received, according to preliminary results released by the company.

“As a businessman and investor, I know how important it is to have the right leadership in a firm,” said Rob McCord, Pennsylvania’s independently-elected State Treasurer. “The recent and tragic Gulf disaster should remind all executives and investors that trust matters — and so do contingency plans. This awareness should prompt Chevron to improve all its planning and its preparedness, and one step is to recruit directors with substantial environmental expertise,” McCord added. “Without this, shareholders face significant and unacceptable legal, regulatory, and market risk. And they will — justifiably –lack trust.”

“The high level of investors support for this resolution is indicative of rising frustration with Chevron’s environmental performance, domestically and internationally,” said Shelley Alpern, vice president at Trillium Asset Management Corporation, the lead proponent of the proposal who represented the proponents at the shareholder meeting.

“We are confident that this sends a message that management cannot ignore,” said Patrick Doherty, a spokesperson for the New York State Common Retirement Fund, which supported the proposal.

At today’s lively meeting, shareholders also expressed high level of support (25%) for a resolution questioning the company’s country selection guidelines in light of its ongoing operations in Burma.  In addition, Chevron denied admission to the annual meeting to 30 legal proxy holders, giving no reasons for not allowing then to enter.  Three legal proxy holders were arrested.  Trillium’s Shelley Alpern told board inside of meeting that “This is outrageous and reflects very poorly on our company’s respect for the laws that govern our proxy process in the United States.”

The proposal points to Chevron’s controversial operations in Ecuador, Nigeria and Kazakhstan, stating “We believe that these controversies have the potential to damage shareholder value and that the company must respond to environmental challenges in an effective, strategic and transparent manner in order to restore trust and minimize the adverse impact of its operations.” It called for Chevron to add an independent director to the board who has a “high level of expertise and experience in environmental matters relevant to hydrocarbon exploration and production and is widely recognized in the business and environmental communities as an authority in such field,” as board openings arise. Chevron’s board membership criteria make no mention of environmental expertise. Current board members’ profiles indicate no specific expertise in environmental issues relevant to the oil and gas sector.

#          #          #          #

About the proponents

Trillium Asset Management Corporation is a Boston-based, independent investment management firm devoted exclusively to sustainable and responsible investing.

As chief executive of the Pennsylvania Treasury, Treasurer Rob McCord directly invests more than $11 billion per year, and oversees Treasury’s role as the Commonwealth’s checkbook – last year alone, Treasury processed over 60 million disbursements totaling more than $70 billion.  The Pennsylvania Treasury is an independent executive office created by the Constitution of the Commonwealth of Pennsylvania.  The State Treasurer is the custodian of the funds of virtually all state agencies, with the responsibility for monitoring and safeguarding money and securities.

Amnesty International USA is a Nobel Prize-winning grassroots activist organization with over 1.8 million members worldwide. Amnesty International undertakes research and action focused on preventing and ending grave abuses of the rights to physical and mental integrity, freedom of conscience and expression, and freedom from discrimination, within the context of its work to promote all human rights. Amnesty International USA (AIUSA) is the U.S. Section of Amnesty International.

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Plum Creek Timber Company (PCL): Say on Pay

Our “say on pay” proposal called upon management to submit an advisory resolution on executive compensation for shareholder approval at annual meetings. After evaluating the resolution, for which Trillium was the lead filer, Plum Creek Timber’s Board of Directors deemed it to be “consistent with evolving best practices” and agreed to begin putting the compensation to a vote beginning in 2011.

Lincoln Electric Holdings, Inc. (LECO): Inclusive LGBT Workplace Policies

Trillium was a co-filer with Calvert Group Ltd. on a proposal to add the categories “sexual orientation” and “gender identity or expression” in the Equal Employment Opportunity and Anti-Harassment policies of Lincoln Electric. In the fall of 2009, Lincoln Electric amended their Code of Corporate Conduct and Ethics to explicitly prohibit discrimination based on both categories.

State Street Bank (STT): Political Contributions

Trillium’s resolution requested a semi-annual report detailing the policies and procedures related to political contributions and the monetary and non-monetary contributions and expenditures.  After some initial dialogue, State Street has acknowledged that political contributions are “an issue of increasing interest to corporate shareholders particularly in light of efforts at financial reform,” and has agreed to further dialogue with Trillium and the Center for Political Accountability to explore expanded disclosure options.

Whole Foods Market: Separate Chair and CEO Positions

Trillium co-filed a resolution sponsored by Change to Win Investment Group calling on Whole Foods Market to separate the positions of Chairman of the Board and CEO.  Since the resolution was filed, CEO John Mackey stepped down as Chairman of the Board.

Some of Trillium’s other engagement initiatives this season include resolutions that will be going to a vote at Ford Motor Company (political contributions transparency), Home Depot (disclosure of workforce diversity data), Chipotle (reduction of pesticide use in supply chain), Google (sustainability reporting), J.M. Smucker (sustainability reporting), CenturyLink (freedom of expression and privacy), Coca-cola (bisphenol-A co-file) and Gardner Denver (workplace policies regarding lesbian, gay, bisexual and transgender employees). More information about these resolutions can be found at our web site.*

A resolution sponsored at Bank of America (BAC) concerning the company’s financing of coal companies engaged in mountaintop removal was deemed excludable from the proxy ballot by the Securities and Exchange Commission (SEC). In discussions with the Bank, however, we learned that its relatively new coal policy, has led it to decline deals with companies whose predominant method of extraction involves mountaintop removal.

For the second year, the Securities and Exchange Commission (SEC) has concluded that net neutrality is not an important enough issue to allow AT&T and Verizon shareholders to consider our shareholder proposals concerning net neutrality. Given that President Obama and over one hundred members of Congress, as well as hundreds of civil rights organizations, have all spoken up on the importance of a free and open Internet, we consider this conclusion deeply flawed. We will continue to press the SEC to reverse its censorship of this critically important shareholder issue.

_________________________________________________________________________

* http://trilliuminvest.com/our-approach-to-sri/advocacy/resolutions-page/.

For more information, please contact:

Shelley Alpern at salpern[at]trilliuminvest.com
(617) 292-8026, x 248

or

Jonas Kron at jkron[at]trilliuminvest.com
(503) 592-0864

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Questar does not explicitly prohibit discrimination based on sexual orientation and gender identity (or gender expression) in its written employment policy;

Over 87% of the Fortune 500 companies have adopted written nondiscrimination policies prohibiting discrimination on the basis of sexual orientation, as have more than 97% of Fortune 100 companies, according to the Human Rights Campaign. Nearly 70% of the Fortune 100 and over 40% of the Fortune 500 now prohibit discrimination based on gender identity or expression;

We believe that corporations that prohibit discrimination on the basis of sexual orientation and gender identity or expression have a competitive advantage in recruiting and retaining employees from the widest talent pool;

According to a June 2008 survey by Harris Interactive and Witeck-Combs, 65% of gay and lesbian workers in the United States reported facing some form of job discrimination related to sexual orientation. An earlier survey found that almost one out of every 10 gay or lesbian adults also reported that they had been fired or dismissed unfairly from a previous job, or pressured to quit a job, because of their sexual orientation;

Twenty-one states, the District of Columbia, and more than 180 cities and counties, have laws prohibiting employment discrimination based on sexual orientation; 12 states, the District of Columbia, and more than 104  cities and counties have laws prohibiting employment discrimination based on sexual orientation and gender identity or expression;..

Minneapolis, San Francisco, Seattle and Los Angeles have adopted legislation restricting business with companies that do not guarantee equal treatment for gay and lesbian employees; the City of Minneapolis’s nondiscrimination laws reference both sexual orientation and gender identity;

Our company has operations in and makes sales to institutions in states and cities that prohibit discrimination on the basis of sexual orientation;

A growing number of companies in the energy sector, such as BP and Chevron, explicitly prohibit sexual orientation in their written policies;

National public opinion polls consistently find more than three quarters of the American people support equal rights in the workplace for gay men, lesbians and bisexuals. In a Gallup poll conducted in May 2007, 89% of respondents favored equal opportunity in employment for gays and lesbians.

RESOLVED

The Shareholders request that Questar amend its written equal employment opportunity policy to explicitly prohibit discrimination based on sexual orientation and gender identity or expression and substantially implement the policy.

SUPPORTING STATEMENT

Employment discrimination on the basis of sexual orientation and gender identity diminishes employee morale and productivity.  Because state and local laws are inconsistent with respect to employment discrimination, our company would benefit from a consistent, corporate-wide policy to enhance efforts to prevent discrimination, resolve complaints internally, access employees from the broadest talent pool, and ensure a respectful and supportive atmosphere for all employees. Questar will enhance its competitive edge by joining the growing ranks of companies guaranteeing equal opportunity for all employees.

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Shareholders of Plum Creek Timber Company request the board of directors to adopt a policy that provides shareholders the opportunity at each annual shareholder meeting to vote on an advisory resolution, proposed by management, to ratify the compensation of the named executive officers (“NEOs”) set forth in the proxy statement’s Summary Compensation Table (the “SCT”) and the accompanying narrative disclosure of material factors provided to understand the SCT (but not the Compensation Discussion and Analysis).  The proposal submitted to shareholders should make clear that the vote is non-binding and would not affect any compensation paid or awarded to any NEO.

SUPPORTING STATEMENT

In our view, senior executive compensation at Plum Creek Timber has not always been structured in ways that best serve shareholders’ interests.  For example, while shareholders were experiencing negative total shareholder return for 2008, CEO Rick Holley received more than $8 million in reported compensation, including more than $6 million in option awards.

We believe existing SEC rules and stock exchange listing standards do not provide shareholders with sufficient mechanisms for providing input to boards on senior executive compensation. In contrast, in the United Kingdom, public companies allow shareholders to cast a vote on the “directors’ remuneration report,” which discloses executive compensation. Such a vote isn’t binding, but gives shareholders a clear voice that could help shape senior executive compensation. A 2007 study of executive compensation in the U.K. before and after the adoption of the shareholder advisory vote there found that CEO cash and total compensation became more sensitive to negative operating performance after the vote’s adoption.  (Sudhakar Balachandran et al., “Solving the Executive Compensation Problem through Shareholder Votes?  Evidence from the U.K.” (Oct. 2007).)

Currently U.S. share exchange listing standards require shareholder approval of equity-based compensation plans; those plans, however, set general parameters and accord the compensation committee substantial discretion in making awards and establishing performance thresholds for a particular year.  Shareholders do not have any mechanism for providing ongoing feedback on the application of those general standards to individual pay packages.

Similarly, performance criteria submitted for shareholder approval to allow a company to deduct compensation in excess of $1 million are broad and do not constrain compensation committees in setting performance targets for particular senior executives.  Withholding votes from compensation committee members who are standing for reelection is a blunt and insufficient instrument for registering dissatisfaction with the way in which the committee has administered compensation plans and policies in the previous year.

Accordingly, we urge our board to allow shareholders to express their opinion about senior executive compensation by establishing an annual referendum process.  The results of such a vote could provide our company with useful information about shareholders’ views on the company’s senior executive compensation, as reported each year, and would facilitate constructive dialogue between shareholders and the board.

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Recent events have increased concerns about the extraordinarily high levels of executive compensation at many U.S. corporations.  Concerns about the structure of executive compensation packages have also intensified, with some suggesting that the compensation system incentivized excessive risk-taking.

In a Forbes article on Wall Street pay, the director of the Program on Corporate Governance at Harvard Law School noted that, “compensation policies will prove to be quite costly—excessively costly—to shareholders.”  Another study by Glass Lewis & Co. declared that compensation packages for the most highly paid U.S. executives “have been so over-the-top that they have skewed the standards for what’s reasonable.”  That study also found that CEO pay may be high even when performance is mediocre or dismal.

In 2008, Federal Appeals Court Judge Richard Posner stated that, “executive pay is out of control and the marketplace cannot be trusted to rein it in.”  Legislative attempts to address executive compensation include the Excessive Pay Shareholder Approval Act, which mandates that no employee’s compensation may exceed 100 times the average compensation paid to all employees of a given company unless at least 60% of shareholders vote to approve such compensation.

A 2008 piece in BusinessWeek revealed that, “Chief executive officers at companies in the Standard & Poor’s 500-stock index earned more than $4,000 an hour each [in 2007].”  It also noted that an S&P 500 CEO had to work, on average, approximately 3 hours in 2007 “to earn what a minimum wage worker earned for the full year.”

A September 2007 study of Fortune 500 firms showed that top executives’ pay averaged $10.8 million the previous year, or more than 364 times the pay of the average U.S. worker.  Another study by the Economic Policy Institute found that between 1989 and 2007, average CEO pay rose by 163% while the wages of the average worker in the United States rose by only 10%.

RESOLVED

Shareholders request the Board’s Compensation Committee initiate a review of our company’s executive compensation policies and make available, upon request, a summary report of that review by October 1, 2010 (omitting confidential information and processed at a reasonable cost).  We request that the report include:

1. A comparison of the total compensation package of senior executives and our employees’ median wage in the United States in July 2000, July 2004 & July 2009.

2. An analysis of changes in the relative size of the gap and an analysis and rationale justifying this trend.

3. An evaluation of whether our senior executive compensation packages (including, but not limited to, options, benefits, perks, loans and retirement agreements) are “excessive” and should be modified to be kept within reasonable boundaries.

4. An explanation of whether sizable layoffs or the level of pay of our lowest paid workers should result in an adjustment of senior executive pay to “more reasonable and justifiable levels” and whether JPMorgan Chase should monitor this comparison going forward.

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Intel has announced that it is discontinuing its physical stockholders meeting in 2010 and will hold the meeting online.

We strongly support the use of new technologies to make annual meetings accessible to stakeholders who cannot attend in person.  This will make “attendance” simpler for investors globally and is a creative tool for expanding outreach to owners.

But we do not believe that Internet-only meetings should be substituted for traditional in-person annual meetings.  Instead, they should be a complementary. We believe the tradition of in-person annual meetings plays an important role in holding management accountable to stockholders.

In contrast, online-only annual meetings could allow companies to control which questions and concerns are heard and manipulate the exchanges between shareowners and the company. Face-to-face annual meetings allow for an unfiltered dialogue between shareholders and management.

The Council of Institutional Investors, a coalition of America’s largest pension funds with portfolios valued over $3 trillion, has among its published corporate governance guidelines for effective governance of public companies, “Cyber meetings should only be a supplement to traditional in-person shareholder meetings, not a substitute.”

Additionally, we believe in-person annual meetings are necessary for several reasons:

• Annual meetings are one of the few opportunities for top management and the Board to interact directly, face-to-face, with a cross section of their shareholders.
• The digital divide persists in the United States and not all shareholders have access to computers.
• Annual meetings provide for direct questions to be posed to the Chair of the Audit, Compensation or Governance Committees of the Board.
• While some corporations argue that eliminating the face-to-face annual meeting is a way to reduce costs and improve efficiency, we believe the investment in creating a physical space for shareholder meeting is money well spent.
• We believe Intel’s decision is a controversial one for a company with a positive reputation on corporate governance.  This decision sets a precedent and creates a “slippery slope” that will encourage other companies that desire to insulate themselves from shareholders to follow suit.  Imagine a company that wanted to downplay investor frustration over compensation policies or practices, or poor business decisions leading to substandard financial performance, or questionable governance or environmental records: “virtual” online meetings would be a perfect way to insulate themselves from shareholder interaction or to “spin” any opposition as insignificant.
• In addition, if there was a major crisis with a company or a merger being proposed, the last thing investors would want is a company’s refusal to hold an actual stockholder meeting.

RESOLVED

Shareholders request that Intel adopt a corporate governance policy affirming the continuation of in-person annual meetings in addition to internet access to the meeting, adjust its corporate practices accordingly, and publicize this policy to investors.

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Equal employment opportunity (EEO) is a fair employment practice and an investment issue. We believe that companies with a good EEO record have a competitive advantage in recruiting and retaining employees. Moreover, we believe Home Depot customers are increasingly diverse; therefore a similarly diverse work force is more likely to anticipate and respond effectively to consumer demand. EEO reporting has economic relevance.

Home Depot shareholder votes in favor of a diversity report surpassed 22%, 25%, and 25% in 2009, 2008 and 2007, respectively – sending a consistent signal to management that shareowners desire increased accountability.

The Company annually files an EEO-1 report with the Equal Employment Opportunity Commission. Hence, this information could be made available to shareholders at a minimal additional cost.

Allegations of discrimination in the workplace burden shareholders with costly litigation that can damage a company’s reputation.

Home Depot has paid out more than $100 million to settle discrimination lawsuits in the last 13 years.  The most significant EEO settlement of $87 million was in 1997. In 2004, Home Depot agreed to pay $5.5 million to settle charges of class-wide gender, race and national origin discrimination at more than 30 Colorado stores. In 2006, Home Depot paid $125,000 to settle a racial discrimination suit.

RESOLVED

The shareholders request that Home Depot prepare a diversity report, at reasonable cost and omitting confidential information, available to investors by September 2010, including the following:

1. A chart identifying employees according to their gender and race in each of the nine major EEOC-defined job categories for the last three years, listing numbers or percentages in each category;

2. A summary description of any affirmative action policies and programs to improve performance, including job categories where women and minorities are underutilized; and

3. A description of any policies and programs oriented specifically toward increasing the number of managers who are qualified females or minorities.

SUPPORTING STATEMENT

In 2006, the U.S. Equal Employment Opportunity Commission reported racial minorities comprised 32% of private industry but just 17% of executives and managers.  Likewise, women represented 48% of the workforce, but just 36% of executives and managers. Employment and advancement barriers persist.

Several major U.S. corporations provide diversity reports with detailed EEO information including Wal-Mart, IBM, Intel, Merck, Costco and Coca-Cola.

In 2001, Home Depot began providing EEO information to investors upon request.  Since then Home Depot reversed its policy on disclosure of this information.

We agree with a recommendation of the 1995 bipartisan Glass Ceiling Commission that “public disclosure of diversity data—specifically data on the most senior positions—is an effective incentive to develop and maintain innovative, effective programs to break the glass ceiling barriers.”

The Social Investment Forum and RiskMetrics concluded in a 2008 study of corporate disclosure of EEO data that corporate transparency on EEO progress is necessary to assess the risks and opportunities of an investment.

Home Depot has demonstrated leadership on many corporate social responsibility issues.  We ask the company to again demonstrate leadership in diversity by committing to EEO disclosure.

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The shareholders of Halliburton (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:

• Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds;
• Monetary and non-monetary political contributions and expenditures not deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including but not limited to contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution if made directly by the corporation would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following:
  • An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above;
  • Identification of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure; and

The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the company’s website to reduce costs to shareholders.

SUPPORTING STATEMENT

As long-term shareholders of Halliburton, we support transparency and accountability in corporate spending on political activities. These activities include direct and indirect political contributions to candidates, political parties or political organizations; independent expenditures; or electioneering communications on behalf of a federal, state or local candidate.

Disclosure is consistent with public policy, in the best interest of the company and its shareholders, and critical for compliance with recent federal ethics legislation.  Absent a system of accountability, company assets can be used for policy objectives that may be inimical to the long-term interests of and may pose risks to the company and its shareholders.

Relying on publicly available data does not provide a complete picture of the Company’s political expenditures.  For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In many cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political contributions, including payments to trade associations and other tax exempt organizations. This would bring our Company in line with a growing number of leading companies, including Hewlett-Packard, Aetna and American Electric Power that support political disclosure and accountability and present this information on their websites.

The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.

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Investors increasingly seek disclosure of companies’ social and environmental practices in the belief that they impact shareholder value. Many investors believe companies that are good employers, environmental stewards, and corporate citizens are more likely to be accepted in their communities and to prosper in the long-term.

Sustainability refers to development that meets present needs without impairing the ability of future generations to meet their own needs. It includes “encouraging long lasting social well being in communities where [companies] operate, interacting with different stakeholders (e.g. clients, suppliers, employees, government, local communities, and non-governmental organizations) and responding to their specific and evolving needs, thereby securing a long-term ‘license to operate,’ superior customer and employee loyalty, and ultimately superior financial returns.” (Dow Jones Sustainability Group)

Globally, approximately 1,500 companies produce reports on sustainability issues (Association of  Chartered Certified Accountants, www.corporateregister.com), including more than half of the global Fortune 500 (KPMG International Survey of Corporate Responsibility Reporting 2005).

Many large institutional investors have made sustainability reporting a key priority and regularly vote in favor of requests for sustainability reporting. According to a Risk Metrics 2008 ESG Background Report, the average level of support for sustainability reporting resolutions has been increasing each year, up to 28.1% in 2008.

American Electric Power has stated, “management and the Board have a fiduciary duty to carefully assess and disclose to shareholders appropriate information on the company’s environmental risk exposure.”

A June 2009 letter from the Investor Network for Climate Risk representing $1.4 trillion in assets called on the Securities and Exchange Commission to require companies to disclose material environmental and social risks using the Global Reporting Initiative as a framework.

A 2009 report from the Boston College Carroll School of Management entitled “The Value of Social Reporting” highlighted the important role sustainability reporting can play in both communication and performance management.

Global expectations regarding sustainability reporting are changing rapidly. The European Commission recommends corporate sustainability reporting, and listed companies in Australia, South Africa and France must now provide investors with information on their social and environmental performance.

RESOLVED

Shareholders request the company issue a sustainability report, at reasonable cost and omitting proprietary information, by April 1, 2011.

SUPPORTING STATEMENT

We believe the report should include the company’s definition of sustainability, as well as a company-wide review of company policies and practices related to long-term social and environmental sustainability. We recommend that the company look to the Global Reporting Initiative’s Sustainability Reporting Guidelines (“The Guidelines”) in preparing the report. The Global Reporting Initiative (www.globalreporting.org) is an international organization with representatives from the business, environmental, human rights and labor communities. The Guidelines provide guidance on report content, including performance in six categories (direct economic impacts, environmental, labor practices and decent work conditions, human rights, society, and product responsibility). The Guidelines provide a flexible reporting system that permits the omission of content that is not relevant to company operations. Over 700 companies use or consult the Guidelines for sustainability reporting.

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Investors increasingly seek disclosure of companies’ social and environmental practices in the belief that they impact shareholder value. Many investors believe companies that are good employers, environmental stewards, and corporate citizens are more likely to generate stronger financial returns, better respond to emerging issues, and enjoy long-term business success.

Globally over 2,700 companies issued reports on sustainability issues in 2007 (www.corporateregister.com). A recent survey found that 80% of the Global Fortune 250 companies now release corporate responsibility data, which is up from 64% in 2005 (KPMG International Survey of Corporate Responsibility Reporting 2008).

Mainstream financial companies are also increasingly recognizing the links between sustainability performance and shareholder value. Information from corporations on their greenhouse gas emissions, environmental stewardship policies, and overall sustainability strategies is essential to investors as they assess the strengths of corporate securities in the context of climate change and increased public awareness of corporate social and environmental responsibility.

As such, it is no surprise that Wal-Mart, Tesco, and other major retailers have taken leadership roles in this area through the publication of comprehensive sustainability reports that address company impacts with regards to greenhouse gas emissions, environmental stewardship, product safety, and other related considerations.

Costco, however, lags behind its global industry peers on sustainability reporting, especially regarding key issues such as environmental stewardship and climate change. In a recent report authored by RiskMetrics, the company received the second lowest score of big-box retailers in terms of climate change governance practices.

It is vital that our company address and report on the impacts of its operations on the environment and on society.

RESOLVED

Shareholders request that the Board of Directors prepare a sustainability report including strategies to reduce greenhouse gas emissions and addressing other environmental and social impacts of Costco’s operations such as water use and seafood sustainability. The report, prepared at reasonable cost and omitting proprietary information, should be published and publicly-available by June 2010.

SUPPORTING STATEMENT

The report should include the Costco’s definition of sustainability and a company-wide review of company policies, strategies, practices, and metrics related to long-term social and environmental sustainability, on issues including climate change, water and sustainable seafood.

We recommend that Costco uses the Global Reporting Initiative’s Sustainability Reporting Guidelines to prepare the report. The Global Reporting Initiative (www.globalreporting.org) is an international organization developed with representatives from the business, environmental, human rights and labor communities. Their guidelines provide a flexible reporting system that allows the omission of content that is not relevant to company operations.

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Environmental expertise is critical to the success of companies in the energy industry because of the significant environmental issues associated with their operations.  Shareholders, lenders, host country governments and regulators, and affected communities are focused on these impacts.   A company’s inability to demonstrate that its environmental policies and practices are in line with internationally accepted standards can lead to difficulties in raising new capital and obtaining the necessary licences from regulators.

Chevron has repeatedly been cited for allegedly harmful environmental practices:

• Chevron is on trial in Ecuador for widespread contamination of Amazonian land and water resources by Texaco in the 1970s. Plaintiffs suing Chevron are challenging the adequacy of a remediation effort completed in 1998. A court-appointed expert in the Ecuadorian litigation has recommended that Chevron could be held liable for up to $27.3 billion in damages.
• Chevron is accused of polluting land and water resources by its Niger Delta operations, and damaging the local fishing economy through dredging of waterways. These practices have fueled civil unrest, protests, and a related lawsuit alleging Chevron’s complicity in security forces’ killing of two protestors.
• Chevron faces allegations of environmental and health damages to local communities from its operations in Kazakhstan. In 2007, a consortium in which Chevron has a 50% interest was fined approximately $609 million for illegally storing sulphur.

We believe that these controversies have the potential to damage shareholder value and that the company must respond to environmental challenges in an effective, strategic and transparent manner in order to restore trust and minimize the adverse impact of its operations.

Chevron does not currently have an independent director with environmental expertise. We believe it would benefit the company to address the environmental impact of its business at the most strategic level – by appointing a specialist to the board.  An authoritative figure with acknowledged environmental expertise and standing could perform a valuable and strategic role for the company by enabling Chevron to more effectively address the environmental issues inherent in its business. It would also help ensure that the highest levels of attention focus on the development of environmental standards for new projects.  Such a board role would strengthen the company’s ability to demonstrate the seriousness with which it is addressing environmental issues.

RESOLVED

Shareholders request that, as the terms in office of elected board directors expire, at least one candidate be recommended who:

• has a high level of expertise and experience in environmental matters relevant to hydrocarbon exploration and production and is widely recognized in the business and environmental communities as an authority in such field, in each case as reasonably determined by the company’s board, and
• will qualify, subject to limited exceptions in extraordinary circumstances explicitly specified by the board, as an independent director under  standards applicable to the company as an NYSE listed company,

in order that the board includes at least one director satisfying the foregoing criteria, which director shall have designated responsibility on the board for environmental matters.

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Shareholders of Ford Motor (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:

• Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds.
• Monetary and non-monetary political contributions and expenditures not deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including but not limited to contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution if made directly by the corporation would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following:
  • An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above;
  • Identification of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure; and

The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the company’s website to reduce costs to shareholders.

SUPPORTING STATEMENT

As long-term shareholders of Ford Motor, we support transparency and accountability in corporate spending on political activities. These activities include direct and indirect political contributions to candidates, political parties or political organizations; independent expenditures; or electioneering communications on behalf of a federal, state or local candidate.

Disclosure is consistent with public policy, in the best interest of the company and its shareholders, and critical for compliance with recent federal ethics legislation.  Absent a system of accountability, company assets can be used for policy objectives that may be inimical to the long-term interests of and may pose risks to the company and its shareholders.

Ford Motor contributed at least $1.7 million in corporate funds since the 2002 election cycle.  (CQ’s PoliticalMoneyLine:  http://moneyline.cq.com/pml/home.do and National Institute on Money in State Politics: http://www.followthemoney.org/index.phtml.)

However, relying on publicly available data does not provide a complete picture of the Company’s political expenditures.  For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In many cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political contributions, including payments to trade associations and other tax exempt organizations. This would bring our Company in line with a growing number of leading companies, including Hewlett-Packard, Aetna and American Electric Power that support political disclosure and accountability and present this information on their websites.

The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.

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Mackey, the founder of Whole Foods, has been a controversial leader. His pseudonymous internet postings denigrating the Wild Oats grocery chain, later acquired by Whole Foods, led the Federal Trade Commission to sue to block the acquisition of Wild Oats in 2007, and triggered an investigation by the Securities and Exchange Commission. He has antagonized many customers and shareholders with his outspoken anti-union views, and his August 2009 op-ed piece in the Wall Street Journal that attacked large-scale healthcare reform provoked a boycott of the chain. The resolution states that having the positions of CEO and Board Chair held by the same person “may not serve the best long-term interests of shareholders,” noting that one of the Board’s duties is to evaluate CEO performance.

The resolution also points out “an urgent need for objective and independent Board evaluation of our Company’s strategic plan, as Whole Foods trailed the S&P 500 and Dow Jones Food Retailers & Wholesalers Index for the three-, four- and five-year periods ending September 21, 2009,” and notes the critical role that Chair plays in shaping the Board’s work.

The entire resolution can be viewed here.

Tags: Corporate Governance, independent chair, John Mackey, Whole Foods

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That pursuant to Section 2.23 of the Texas Business Corporation Act and Article IX of the Amended and Restated Bylaws of Whole Foods Market, Inc., the stockholders of Whole Foods Market, Inc. hereby amend those Bylaws as follows:

• Article III, entitled “Directors”, is amended by adding the following section 13:

“Independent Chairman. The Chairman of the Board shall be a director who is independent from the Corporation. For purposes of this requirement, “independent” has the meaning set forth in New York Stock Exchange (“NYSE”) listing standards, unless the Corporation’s common stock ceases to be listed on the NYSE and is listed on another exchange, in which case such exchange’s definition of independence shall apply. If the Board determines that a Chairman who was independent when time he or she was selected is no longer independent, the Board shall select a new Chairman who satisfies this independence requirement within 60 days of such determination. Compliance with this independence requirement shall be excused if no director who qualifies as independent is elected by the stockholders or if no director who is independent is willing to serve as Chairman. This independence requirement shall apply prospectively so as not to violate any contractual obligation of the Corporation that may be in effect when this requirement was adopted. This section shall not be amended or repealed by the Board of Directors.”; and

• Article V, entitled “Officers”, is amended by deleting from section 2 thereof, entitled “Election”, the sentence “No officer need be a member of the Board of Directors except the Chairman of the Board, if one be elected.” and substituting therefor: “No officer need be a member of the Board of Directors.”

SUPPORTING STATEMENT

The Board of Directors is responsible for protecting shareholders’ interests through independent oversight of management, including the Chief Executive Officer’s (CEO) performance. Currently Mr. John Mackey is both Board Chairman and CEO. We believe that combining the two positions may not serve the best long-term interests of shareholders.

We see an urgent need for objective and independent Board evaluation of our Company’s strategic plan, as Whole Foods trailed the S&P 500 and Dow Jones Food Retailers & Wholesalers Index for the three-, four- and five-year periods ending September 21, 2009. By setting the agenda for, and leading discussions of, strategic issues at the Board level, the Chairman is critical in shaping the Board’s work.

We believe an independent Chairman will enhance Board leadership and protect shareholders from potentially harmful management decisions. Corporate governance experts agree. In a 2009 report the Milstein Center at Yale School of Management recommended splitting the two positions as the default provision for U.S. companies. In 2008 and 2009, proxy advisor RiskMetrics/ISS recommended voting FOR a shareholder proposal urging separation of the roles at our Company.

Given our Company’s performance in recent years, the uncertain competitive landscape, and the importance of independent scrutiny of management, we urge a vote FOR this resolution.

The Securities and Exchange Commission (SEC) is currently considering whether to allow shareholders to offer their own nominees to the board and, most importantly, have those nominees appear in the company proxy statement. If the proxy access proposed rule is adopted, corporate directors will be compelled to take shareholder concerns much more seriously or face real challenges to their monopoly on leadership.

In light of the past year’s events and the importance of this issue, Trillium took a leading role within the Social Investment Forum (SIF) to help develop the template letter for SIF members wishing to comment on the SEC proposed rule. Our comment letter can be found on the SEC website and here.