Proxy ballots: your chance to make a difference

Don't toss that envelope. Shareholder resolutions address issues ranging from executive pay to human rights.

By Steve Dinnen | Correspondent of The Christian Science Monitor

from the April 28, 2008 edition

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Questions about the nation's home-mortgage and foreclosure crisis are falling in with executive pay, criteria for military contracts, and other resolutions that investors are putting to public companies they own.

With this year's proxy season in full swing, investors are demanding an explanation of loans that not only hurt home buyers but also trashed the balance sheets of many companies that provided the funds.

CtW Investment Group, for one, is suggesting that union pension plans it advises vote against certain directors of huge financial-services concerns tied to the foreclosure crisis. At Morgan Stanley, for instance, CtW charges that two directors "failed to maintain the integrity of Morgan Stanley's risk management and thus bear central responsibility for the firm's $9.4 billion in subprime-related writedowns in 2007."

All directors of Morgan Stanley were reelected on April 8 at its annual meeting. But a week later, CtW and other dissatisfied shareholders of Washington Mutual pressured the lender hard enough over its involvement in risky home loans that the chairwoman of the finance committee resigned. Michael Garland, director of values strategy at the firm, suggests that when it comes to corporate governance and accountability, CtW will be a voice for some 6 million union members that boards will hear loud and clear.

"We have to make all decisions based upon long-term best economic interests of plan participants," he says.

Like any other long-term investor, those participants have been battered lately, with shares of Morgan Stanley off 43 percent from their 52-week high as of April 11. Others have fared even worse during the mortgage crisis and subsequent liquidity crisis: Bear Stearns Cos. and Countryside Financial Corp. have both plunged about 90 percent and are seeking merger partners.

The Interfaith Center on Corporate Responsibility lists hundreds of shareholder resolutions on its website (iccr.org). Questions about subprime lending appear for Countrywide, the nation's largest mortgage lender that was wounded so badly that it is seeking a merger with Bank of America Corp. Shareholder resolutions about corporate finances also face Bank of America, J.P. Morgan & Co., and Merrill Lynch & Co.

Climate change and the environment continue to interest shareholders. So does ethical criteria for military contracts, which has brought shareholder questions to companies such as General Dynamics and Textron.

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