AT Exxon Corporation's annual shareholders' meeting last month, one speaker told chairman L.G. Rawl that stockholders would be willing to sacrifice if it enabled the company to do more in cleaning up its Alaskan oil spill. Cries of ``No! No!'' rose from other shareholders. But the ``bottom line is everything'' attitude this exemplifies may be on its way out, especially if some big public pension funds have their way. The funds, which took the lead in pressuring Exxon to make concessions to environmentalists following the spill, say they intend to keep up their new, more visible posture.
``Large institutional investors no longer play a passive role,'' says Harrison Goldin, New York City comptroller and asset manager for New York City pension funds.
Mr. Goldin, a force behind the new activism, says making sure companies are sensitive to the ``national agenda'' is in the interests of the fund's beneficiaries. ``When we invest, we are tied to the overall environment,'' he says.
Institutional investors are not small potatoes. Together, they hold 34 percent of Exxon's nearly 1.3 billion shares of common stock. New York City owns 5.5 million shares. The California Public Employees Retirement System is the largest institutional investor in Exxon, with 8 million shares; the California State Teachers Fund has 5.5 million. California State Controller Gray Davis, who has a representative on both funds' boards, has been in the forefront of the move for greater activism.
State and city pension funds have more than $600 billion in assets. Unions, universities, churches, and other institutions also have sizable investment funds.
``It seems to be part of an emerging trend, particularly with those funds who have a constituency, such as New York,'' notes Stephen Smith, an oil stock analyst at Bear Stearns. ``It's been slowly evolving for some time. I think we'll see more of it.'' He says Exxon and its spill were a lightning rod.
At Goldin's first meeting with Exxon senior management after the spill, he was joined by other members of the Council of Institutional Investors demanding new procedures and policies. The company agreed to steps to reduce the likelihood of future disasters.
These steps include appointment of an environmentalist to its board and making a board committee responsible for public issues like the environment. Goldin says Exxon was told if it did not take steps, the funds would consider voting their shares against management.
Goldin considers the results significant. ``Exxon is the largest energy company, and one that historically hasn't been sensitive to shareholders,'' he says.
Exxon spokesman Bill Smith, while agreeing the funds are influential, plays down recent developments. He says Exxon has always met with major shareholders. ``If real big shareholders want to chat about something, we chat.''
A smaller but no-less-vocal component of the growing fund movement is the churches. ``Our clout is not in the number of shares we have,'' says Tim Smith, executive director of the Interfaith Council on Corporate Responsibility. ``The influence of the churches is in the moral and ethical credibility brought to the debate.'' Mr. Smith says his group is considering asking a number of other oil companies to put environmentalists on their boards.
Other institutions lobby more quietly. Mary Camper-Titsingh, the Ford Foundation's ``social responsibility analyst,'' says the fund's trustees feel that ``If we're making grants to environmental groups, we don't want to own stock in major polluters.'' The foundation will write to Exxon management.
Because Exxon agreed to the changes shortly before the shareholder meeting, the funds felt it inappropriate to confront executives at the session. But, warns Goldin, ``We will be watching closely.'' If Exxon does not follow through on its promises, he says, ``there is always 1991 and 1992.''
The upshot of all this, Goldin predicts, is that large corporations will eventually have to give public funds seats on their boards.