May 25, 2013
How Not to Endear Yourself to Shareowners
by Robert Kropp
Range Resources attacks Trillium Asset Management for requesting that it report on fugitive methane
emissions, and Urban Outfitters seeks to address diversity concerns by appointing the wife of the
CEO to the board.
Call it, if you will, the JPMorgan effect: usually the proxy season passes with a minimum of
attention paid to it; sustainable investors and other advocates for the alignment of finance and
social responsibility labor at significant expense of time and money to have their concerns
addressed while externalization of costs and wealth inequality persist.
year seems different, and not only because of the enormous attention paid to the shareowner vote at
JPMorgan Chase that was cast by the mainstream media as a referendum on the performance of Jamie
Dimon. In fact, the shareowner resolution calling for the separation of the positions of board
chair and CEO was entirely in keeping with volumes of research demonstrating that the separation of
the positions is an exercise in good corporate governance.
Despite the compelling
research, the board of JPMorgan embarked on what The New York Times described as an "unusually
proactive" campaign to convince mainstream institutional investors to vote against the measure. And
as advance voting was tallied the Securities Industry and Financial Markets Association (SIFMA), a
Wall Street trade group of which JPMorgan is a member, convinced Broadridge Financial Solutions, a
proxy distribution service, to reverse a long-standing policy and conceal the tallies from
Maybe the heightened attention this year has driven other companies to
unusual lengths to try to prevent sustainable resolutions from passing. Take for example the
reaction by Range Resources, a company engaged in hydraulic fracturing, to a resolution filed by Trillium Asset Management. Asking that a company in the natural
gas industry report on fugitive methane emissions, as Trillium has of Range Resources and two other
companies, is entirely reasonable.
Methane "is a potent contributor to accelerating
climate change with 72x the impact of CO2 on global temperatures over a 20 year period," Trillium
states. "And a leakage rate above 3.2% makes natural gas worse than coal in driving global
warming." Studies have indicated that methane leakage from natural gas production may be as high as
Last year, an international coalition of investors representing some $20
trillion in assets under management
called for "effective steps to minimize methane emissions by the oil and gas sector," as well
as "effective regulations…to minimize fugitive methane emissions." And the shareowner resolutions
filed by Trillium have gained significant support from other investors, including a 21.7% percent
vote in favor at Range Resources.
Nevertheless, Range Resources has decided upon the
dubious strategy of attacki
ng Trillium for filing the resolution. The proposal "is not a proposal from a Range shareholder
who wants to see the Company continue to add shareholder value but is from a group that appears to
have as its primary motive the destruction of shareholder value in companies in the natural gas
value chain and are asking Range shareholders to pay for a fishing expedition to gather data to use
against Range and the industry in what appears to be part of the overall tactic of a small group of
activist organizations to attack the responsible development of fossil fuels," the company charged.
In its letter to shareowners, Trillium stated, "A strong methane management program would
indicate both a reduction in risk, as well as efficient operations maximizing gas for sale and
Another resolution, filed by Calvert Investments and the New York State Common Retirement
Fund, addresses board diversity at Urban Outfitters. Despite owning three clothing brands marketed
exclusively to women, and despite studies showing that the inclusion of women on corporate boards
improves financial performance, Urban Outfitters does not have a single woman on its board of
A similar resolution at the company gained almost 40% of shareowner support at
last year's annual general meeting.
In a response that ranks among the most surreal of
this unusual proxy season, Urban Outfitters has sought to "blunt growing shareholder unrest about
its opposition to corporate diversity" by nominating a woman for its board. The nominee? Margaret
Hayne, the wife of Urban Outfitters CEO and founder Richard Hayne.
Denise Nappier, a co-filer of the resolution, said, "The manner in which the company board is
currently handling this issue is a calculated insult, and reinforces the need to change its
Christine De Groot of Calvert said, "Urban Outfitters should re-evaluate its
position and adopt a formal process that seeks to identify and nominate independent women and
minorities to serve on its board of directors."