Do you know the political slant of your portfolio?
Increasingly, shareholders want to know the political contributions their companies are making.
It's time for investors to stand up and be counted through shareholder resolutions. At corporate annual meetings around the nation, many resolutions involve issues of concern to ethical investors, including executive pay, disclosure of political spending, and even the sexual exploitation of children in tourism. Recently, The Monitor's Laurent Belsie discussed these issues with Boston-based experts Tim Smith, director of socially responsive investment at Walden Asset Management, and Lauren Compere, director of shareholder advocacy for Boston Common Asset Management. Here's an edited transcript of their conversation:
We raise many issues in this forum, but sexual exploitation of children is a new one. What's happening?
Ms. Compere: We filed a resolution last proxy season with Marriott International, looking at the implications of the hotel industry and the link that it's had with children being used abroad and here in terms of sexual exploitation. After Marriott agreed to adopt a policy for protection of children and training their employees to look for [customers preying on them], we decided to broaden the scope of the campaign to look at other hotel chains, airlines, as well as cruise lines. So there were two resolutions that were filed this proxy season with other hotels – Host Hotels and Starwood. But the shareholders have negotiated withdrawal [of the resolutions], and we're currently negotiating terms with both those companies.
What did Marriott agree to do?
Compere: Marriott agreed specifically to amend their human rights policy to include a particular section on protection of children that includes the training of employees to look for this sort of incident. This is training from the front-line receptionist to the CEO himself. It's worldwide. And they also have incorporated some very specific changes in their business code of conduct.
Tim, one big issue this year is executive compensation.
Mr. Smith: This year, a cross section of investors, maybe about 40 of them, have filed resolutions with maybe 60 companies asking for a very simple thing: that we have the right to have an advisory vote on ... the pay package.
And you've had some success?
Compere: We filed one of those resolutions on executive pay at Aflac, which is an insurance company – you know, the famous quack. We filed that resolution because there were some corporate-governance concerns we had: The executive pay of Mr. [Dan] Amos, the CEO, was higher than the average or median pay of the insurance industry. There are also some issues around the board structure itself. And there's a majority of insiders on the board. So we thought that this was a good candidate for this type of resolution. We've been very pleased with Aflac's announcement that they will allow an advisory vote in 2009. They are the first to allow that.
Smith: It's a big breakthrough.
But the vote isn't binding. It's a poll of the shareholders.
Compere: Exactly.
Shareholders are also scrutinizing corporations' political contributions.
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