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Appril 4, 2002
"What's New In Proxy Contests This Year"
Host: Proxy vote. It sounds simple, but there are lots and lots for shareholders to thinks about when it comes time to decide on one resolution or another. On this week's edition of "The Road to Riches," personal finance expert Jordan Goodman talks about our recent experience with the granddaddy of all proxy fights -- and why we should pay attention.
With the corporate annual meeting season about to start, I thought we could take a look at what kinds of proxy issues you will be seeing when you show up at a meeting, or vote through your proxy cards.
When you are a shareholder in a company, you do have the right to vote on these issues, and it is definitely worthwhile doing so. In some cases, like the recent vote on the Hewlett-Packard-Compaq merger, every vote can count. Most activist proxy proposals fail to pass, though they can definitely influence management's thinking on certain issues overtime. Clearly, the biggest theme this year is corporate accountability, in light of the Enron disaster, where the management, board of directors, accountants and auditors did not work in shareholder's best interests -- to put it mildly. Here are some of the areas that will be discussed at annual meetings:- Appointing auditors who are sufficiently independent of management to stop Enron-like abuses and to make sure they are no conflicts of interest between auditors and consultants for the company.
- Tying executive compensation, and particularly, stock options, to stock performance. Shareholders want to prevent the situation with Enron and Global Crossing, where the top executives enriched themselves, while the shareholders, employees and pensioners got wiped out.
- More outside members of the boards of directors. Many want the majority of the board to be people who are not company employees, and to make sure outsiders are on key committees, like audit and nominating -- to be certain there is a check on management.
- Environment: getting more recycled content in products, from Bounty paper towels to Coke cans.
- Sweatshops: resolutions to prevent companies from supporting sweatshops run by their vendors. This applies to McDonalds, Disney, Wal-Mart and Gap.
- Diversity: proxies to promote more hiring of women and minorities at
higher levels in the companies.
- Predatory lending: to prevent companies from charging excessive interest rates on home loans to lower-income consumers.
- Genetically engineered foods: proposal to stop the sale of food that has been genetically engineered.
- Tobacco: proposals to adopt smoke-free restaurants, limit tobacco sales to minors, and restrict tobacco advertising.
For a more detailed look at all of the proxy votes, call 800-762-6814, or go to www.domini.com for their free 44-page booklet, "Proxy Voting Guidelines and Shareholder Activism."
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