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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

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 Presbyterian Church.

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 its proxy.

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 "It is safe to assume that the bank will issue the report" requested by the resolution, Ms. Abbey added.


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