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Boerner's Corner - Corporate Governance Update - (07/27/04) FUTURE OF INDEPENDENT RESEARCH -- GLOBAL SETTLEMENT (SPITZER-TOP 10 FIRMS) EFFECTIVE JULY 26 - AND NOW WHAT FOR BROKERAGE CUSTOMERS-INVESTORS?



CORPORATE GOVERNANCE
July 27, 2004 post

IRRC REPORTS ON PEAK OF 2004 PROXY SEASON SHAREHOLDER RESOLUTIONS - THE MIDYEAR SCORECARD

The Investor Responsibility Research Center (IRRC) is now reporting on the peak season activities (for proxy season 2004). IRRC has issued its midyear recap and companies scorecard. Some proxy contests will stretch out to year-end, but most occurred in spring months.

Four major issue areas for shareholders are tracked by IRRC:

  • Climate Change and Renewable Energy

  • Corporate "Sustainability" Reporting

  • Investor Displeasure with Classified Boards of Directors

  • Mandatory Expensing of Options (shareowners want this)

The scorecard at midyear point:

Reporting on Climate Change and Renewable Energy

Proposals focused on company reporting on reduction of greenhouse gas emission, global climate change risk and development of renewable energy alternatives.

28 global warming shareowner proposals were filed at 22 companies (including 3 filings at 2 Canadian companies)

11 resolutions came to vote at US companies

Several were withdrawn when targeted companies agreed to conduct reviews

  • Apache Corp, 37% shareowner vote in May

  • Anadarko Petroleum Corp, 31% of shareowner vote in May

  • Marathon Oil Corp, 27% of shareholder vote in April

Encouraging Sustainability Reporting

Resolutions filed at 28 companies - twice the number of 2003 - asking companies to report generally on their sustainability policies (or) to report to shareowners based on Global Reporting Initiative (GRI) guidelines.

Proponents say proactive monitoring and disclosure of economic, social and environmental issues help companies in the long run, especially in developing greater brand recognition, practicing effective risk management and for recruiting employees

11 resolutions came to vote at US companies by midyear

  • Ryland Group Inc, 42% of shareowner vote won in April meeting

  • AGCO Corp, 38% of vote in April

  • Cooper Cameron Corp, 30% vote in May

Repeal of Classified Boards

Some investors believe that classified - "staggered" - boards reduce director accountability to shareowners or entrench poor or mediocre corporate management.

IRRC is tracking 56 shareowner sponsored resolutions this year that seek to eliminate classified boards (up from 48 filed last year).

Note that 66% of votes on these issues supported repeal classified boards (at midyear).

  • Allegheny Energy Inc., 98% of shareowner votes filed in May meeting

  • Baker-Hughes Inc, 90% of vote in April

  • EDS/Electronic Data Systems Corp, 88% of vote in May

  • Costco Wholesale Corp, 76% of vote in January

  • Qualcomm Inc., 73% of vote in March

  • Honeywell International Inc., 73% of vote in April

Corporations Expensing Stock Options

These types of shareowner proposals actually dropped in volume in 2004 - 49 proposals this year (vs. 69 in 2003, most generated by labor-affiliated investors and which won an average of 47% voter support)

Proposals - Scorecard

  • Georgia Pacific, to date, is the only company to agree to expensing options after shareowner proposal passed with majority vote (16 other companies adopted options expensing last year and had proposals withdrawn)

  • PerkinElmer, 61% of vote in April 04 in favor of expensing

  • Texas Instruments, Inc. 58% of vote in April

  • Hewlett-Packard Co, 57% of vote in March

  • At midyear, a number of votes are still being tallied

For more details and company scorecards, see: http://www.irrc.com/company/scorecard_04.html

Source: Investor Responsibility Research Center, Washington DC


Copyright 2005 H.L. Boerner. All rights reserved.

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