2010 Shareholder Resolutions

2010 Shareholder Resolutions

In 2009/2010, Responsible Wealth members have filed shareholder resolutions on the following issues:

  1. Say on Pay (the right of shareholders to vote on executive compensation packages)
  2. Pay Disparity (the gap between CEO compensation and average worker pay)
  3. Virtual Shareholder Meeting
  4. Proxy Voting
  5. Succession Planning
  6. Board Diversity

Say on Pay

While the economy has been in a deep recession, triggered by the financial crisis that began in 1998, many executives, particularly in the financial sector, have continued to receive outsized compensation packages. Responsible Wealth members have expressed their concern through “Say on Pay” shareholder resolutions, which propose giving shareholders a non-binding advisory vote on the pay of senior executives in the company. Responsible Wealth is part of a broad coalition of socially responsible investors, foundations, pension funds and others who together filed over 100 Say on Pay resolutions in both 2008/2009 and 2009/2010. To date, over 40 companies have adopted Say on Pay policies, and legislation is moving in Congress to require such votes at all publically traded companies.  

Although “Say on Pay” resolutions are relatively new, studies have shown that they have increased the quality of communication between shareholders and board members/executives. Say on Pay allows shareholders to provide valuable input in the formulation of CEO compensation packages by opening up dialogue between top executives and shareholders and holding executives more accountable for the company's long-term performance as reflected in their compensation.  For 2010, we have re-filed Say on Pay resolutions with Target and Yahoo.

Pay Disparity

Over the past few decades, the growth of CEO pay packages has far exceeded that of the national average income. This resolution asks companies to take a look at the CEO pay/average worker pay gap by asking the company to report on the following:

  1. A comparison of the total compensation package of senior executives and 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 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 the company’s lowest paid workers should result in an adjustment of senior executive pay to “more reasonable and justifiable levels” and whether the firm in question should monitor this comparison going forward.

For 2010, we filed Pay Disparity resolutions with JP Morgan Chase, Morgan Stanley, and Comcast.  The Comcast resolution was subsequently withdrawn due to a filing technicality (the filer owned the wrong class of shares).

Virtual Meeting

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 many 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, the use of video or audio conferencing should be complementary to the physical meeting. We believe the tradition of in-person annual meetings plays an important role in holding management accountable to stockholders. By making all meetings purely virtual, executives and board members are able to manipulate the conditions of discourse to their advantage. This resolution asks to maintain a physical meeting as a means of ensuring the both the accountability of executives/board members and the quality of representation of stockholders. For 2010, we filed a virtual meeting resolution with Intel. Intel agreed to hold a physical meeting in 2010 and Responsible Wealth withdrew our resolution.   

Proxy Voting (specific to State Street Corporation)

As part of its fiduciary duty, State Street Corporation is responsible for voting proxies of companies in which it holds stock on behalf of its clients. However, its proxy voting record seemed to ignore State Street’s proclaimed environmental commitment and stated position regarding the impact of key environmental factors on shareholder value. We believe a thoughtful fiduciary must carefully review the economic rationale for all proxy initiatives. This resolution requested that the Board initiate a review of State Street Global Advisor’s Proxy Voting Policies, taking into account State Street’s own corporate responsibility and environmental positions and the fiduciary and economic case for each shareholder resolution presented. This resolution was filed with State Street Corporation. State Street has agreed to revise its proxy voting policy and we have withdrawn our resolution.

Board Diversity (specific to Intel Corporation)

The goal of this resolution is to raise the issue of introducing racial diversity within Intel’s board of directors. While Intel is by no means the epitome of board homogeneity (breaking the gender gap with three women serving on the board of directors), there is currently no racial diversity on the board. A growing body of research has shown that board diversity is a component of sound corporate governance and a key attribute of a well-functioning board. In an increasingly complex and diverse U.S. and global marketplace, the ability to draw on a wide range of viewpoints, backgrounds, skills, and experience is critical to a company’s success. After a good-faith discussion with Intel about strengthening its practices with respect to recruiting diverse candidates for board seats, we agreed to withdraw our resolution. 

Succession Planning (specific to Intel Corporation)

CEO succession is one of the primary responsibilities of a board of directors.  This resolution asks the board of directors to initiate a process to include in the company’s corporate governance guidelines a written and detailed succession planning policy. The resolution proposes that the new policy should require: an annual review of succession strategies; criteria for ensuring that the CEO position reflects the needs of the company; a plan to identify and develop internal candidates for the CEO position; initiation of a non-emergency succession planning committee at least three years before any anticipated transition, and an emergency succession plan; and the creation of a annual report to shareholders on the company’s succession planning.  This resolution was filed with Intel Corporation and withdrawn after negotiation with the company and assurance from the company that it is adequately focused on this issue and will provide greater transparency on this issue in the future.

Please follow the links below to see the text of the 2010 resolutions.

Company Issue Documents
Comcast Pay Disparity Resolution
Intel (I)
Virtual Meeting Resolution
Intel (II)
Board Diversity Resolution
Intel (III)
Succession Planning Resolution
JPMorgan Chase Pay Disparity Resolution
Morgan Stanley Pay Disparity Resolution
State Street Proxy Voting Resolution
Target "Say on Pay" on Executive Compensation Resolution
Yahoo! "Say on Pay" on Executive Compensation Resolution

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