Global Warming, Labor Standards Lead '03 Proxy Charges

As of February 1, at least 862 shareholder proposals had been filed at publicly traded US companies, compared with just 802 in all of 2002, according to an Investor Responsibility Research Center (IRRC) and Interfaith Center on Corporate Responsibility (ICCR) report entitled “2003 Shareholder Proxy Season Overview: Social and Corporate Governance Resolution Trends.”

Among the fastest-growing issue areas for resolutions include excessive CEO compensation, global warming, dividing the positions of CEO and chairman, and sexual orientation anti-bias policies.  The new report notes that filings of corporate governance resolutions rose sharply to 625 by early February 2003, compared with 529 in all of 2002.  At least 237 social and environmental resolutions had been filed by mid-February, up slightly from the number at this point last year.

Socially/Environmentally Conscience

The leading category for social shareholder advocacy in 2003 is the environment, where 58 proposals have been filed so far, compared with 60 in 2002.   Global warming concerns also make up a large chunk of the filings, 25, compared to 21 last year.   Also, global labor standards are well represented, with 27 proposals filed. Concerns over health care and drug development, equal employment opportunity (particularly the push for sexual orientation anti-bias policies), and tobacco have inspired numerous resolutions this year. 

New proxy issues for 2003 relate to the global AIDS crisis and sustainability reporting.  This year, religious investors affiliated with ICCR once again have filed proposals related to “glass ceiling” concerns at major corporations and at defense contractors concerning their foreign military sales and involvement in space weapons programs.  

Sexual orientation anti-bias policies have seen support this year.   Shareholder proponents of sexual orientation anti-bias policies have filed 19 proposals so far for 2003 meetings, up from nine in 2002. New York City pension funds proposed 11 such resolutions for 2003, six of which have already been withdrawn after the funds determined that the companies involved had revised their policies.

The report points to last year’s results when looking for possible support level for social/environmental resolutions.  In 2002, average support for social issue proposals climbed to 9.4%, the highest level in 10 years. Of these results, over 14% of the proposals voted on got at least 15% support, the highest proportion in at least a decade.  Proposals that did particularly well in 2002 were those asking companies to expand or report on their fair employment policies or to report on their greenhouse gas emissions.

Corporate Governance

The business scandals of 2002 did not significantly affect the number of proposals submitted last year since most proxy submission deadlines already had passed by the time the most notorious cases came to public attention.  But investors’ ire was clearly reflected in high support levels during 2002 for virtually all proposals, including several being voted on for the first time.

Among the concern this year are two dealing with the top brass in corporate America.   Executive pay issues have an major focus in 2003, accounting for 44% of all the governance proposals. Also, there has been a surge in resolutions to separate the chairman and CEO positions.  This year has seen 27 proposals on that topic so far, compared with just four for all of 2002.  Three of those four were voted on last year, receiving average support of 36% of votes cast.