Proxy ballots: your chance to make a difference

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

from the April 28, 2008 edition

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Executive compensation continues to be a hot item this year, with investor questions or resolutions put to companies as varied as Apple Computer Inc. to Tootsie Roll Industries.

ExxonMobil Corp. also faces shareholder questions about executive pay and questions about governance (appointing a lead director), community accountability, and the environment. Besides standard votes on items such as directors, ProxyDemocracy.org shows ExxonMobil facing 17 resolutions from investors at its annual meeting May 28 in Dallas.

Shareholder resolutions often spring up from individual investors. But their fate generally is in the hands of institutions, such as pension plans and mutual funds, which own or control large blocks of stock in a particular company. Mutual-fund companies don't typically communicate their voting plans with their shareholders, but ProxyDemocracy tracks how 80 of the largest funds vote their shares.

Shareholders of Fidelity Contrafund ($73 billion in assets) voted ahead of the fund's March 19 meeting on whether it should dump holdings in firms that "substantially contribute to genocide."

A lot of little voices can add up to one big voice, says James McRitchie, who runs corpgov.net, a website that follows corporate governance issues. He urges shareholders to open the proxy statements that they receive from firms.

While shareholders are noted for voting with their feet – cashing out a stock that they're unhappy with – Mr. McRitchie says that with some moxie, even little guys can sometimes make a difference.

McRitchie, of suburban Sacramento, Calif., recalled that he was puzzled as to why outside directors of Whole Foods Inc. did not have a policy that mandated them to periodically meet outside the presence of the company's CEO. So McRitchie dialed up the company's investor relations department and voiced his concern.

Now, Whole Foods has adopted the very same policy that McRitchie pressed for. He says that other ideas haven't gone as far, but he believes that in the post-Enron era, corporate America is listening more to individual shareholders. And investors are better at talking.

"Internet tools like message boards, social networking, and video-exchange sites are making it easier to galvanize support around good ideas," he says. "You can make a difference."

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