February 24, 2004
Five Companies Comply with Terms of Shareowner Resolutions in One Week
by William Baue
In less than seven days, Dover, Masco, Cinergy, AEP, and Bank of Montreal all abided by the
requests of investors, a major achievement for shareowner action.
The term "resolution" conjures multiple meanings. When referring to a shareowner resolution on a
company proxy ballot, the term denotes a "formal statement," though an accompanying connotation of
"resoluteness" usually applies to shareowners who file resolutions. Case in point: it took more
than a decade of persistence before the renowned "Cracker Barrel" resolution convinced the CBRL Group
(ticker: CBRL) to
add sexual orientation nondiscrimination to its Equal Employment Opportunity (EEO) policy.
"Resolution" also means "creating a solution," a definition connoting collaboration. In
the past week, five companies agreed to implement exactly what shareowner resolutions requested,
illustrating this interpretation of the term.
Yesterday, Swarthmore College announced that both Dover (DOV), a manufacturer
of industrial products, and Masco (MAS), a manufacturer of home
consumer products, agreed to add sexual orientation nondiscrimination to their EEO policies. These
commitments prompted the withdrawal of the resolution at each of these Fortune 500 companies.
"As long-term investors, we seek to build relationships with companies in which we invest--we
often dialogue with management on issues related to our social criteria and push companies for
incremental changes," said Amy Augustine, Associate Social Research Analyst at the Calvert Group. Joining Swarthmore and
primary filer Walden Asset
Management, Calvert co-filed the resolution at Dover, where 42.8 percent of voting shareowners
supported the measure last year. "When we file a shareholder resolution, however, our efforts at
dialogue do not cease."
"As we advocate for improvement, we continue to try and work
constructively with management, and in many cases, we are able to reach an agreement with
management leading to our withdrawal of the resolution," Ms. Augustine told SocialFunds.com.
Late last week, Cinergy (CIN) and American Electric Power (AEP) agreed to comply
with resolutions asking them to report on how they intend to mitigate risks of regulations limiting
greenhouse gas (GHG) emissions that will almost surely be passed in the future. The resolution,
which specifically asks the companies to form a committee of independent directors to oversee the
reporting, targets utility companies due to the intensity of their emissions of carbon dioxide, the
main GHG associated with global warming.
"Shareholders have been raising this issue since
the early 1990s, so it's significant that we're working together to cooperate on an action plan,"
said Bill Somplatsky-Jarman, associate for Mission Responsibility Through Investment for the
The Presbyterian Church, which has assets of $8 billion, withdrew
the resolution it had filed at Cinergy; likewise, the $19 billion Connecticut Retirement Plans and
Trust Funds (CRPTF)
withdrew its resolution at AEP. Cinergy will print the resolution in its proxy along with a
statement of its decision to "accept and comply" with it, a striking about-face from last year's
successful appeal to the US Securities and Exchange Commission (SEC) to omit the resolution from
This spate of companies acceding to the terms of shareowner resolutions
includes one that is north of the border. Today, at the Bank of Montreal (BMO) annual meeting, 90.9 percent
of shareowners voted in favor of a resolution asking the bank to disclose how it evaluates and
manages environmental risks to its business. The vote represents "one of the strongest majorities
ever recorded in Canada" for a social or environmental resolution, according to Real Assets Investment Management, which filed the resolution.
"We got 29.9 percent of the vote for a similar resolution with the Bank of Montreal last
year," said Deb Abbey, CEO of Real Assets.
Why the huge jump in shareowner support?
This year, BMO's directors recommended its shareholders vote for the resolution, the first
such endorsement in the history of corporate Canada for a social or environmental resolution,
according to Real Assets.
"I think that the bank asked its shareholders to vote in favor
of the resolution this year in order to demonstrate that it is responsive to the concerns of its
shareholders," Ms. Abbey told SocialFunds.com. "It is safe to assume that the bank will issue the
report" requested by the resolution, Ms. Abbey added.