Corporation Votes On Company Proxies

A record number of company proxy proposals dealing with social issues like the environment was voted on by the Harvard Corporation last year, said a report released today.

Because of its extensive investments, Harvard’s Corporation Committee on Shareholder Responsibility (CCSR) weighed in on 157 proxy proposals—resolutions presented by shareholders to their companies—for about 100 companies at annual meetings held between March and June.

Secretary to the Committee Elizabeth A. Gray said the total is probably the highest number CCSR has voted on, though she said that in past years as many as 200 proxy proposals have been filed, with some later withdrawn.

CCSR, made up of three Corporation members, receives non-binding advice from the 12-member Advisory Committee on Shareholder Responsibility (ACSR), which is composed of students, faculty and alumni. The two committees agreed 80 percent of the time, the report said.

Gray said the proxy process allows shareholders to highlight matters for management that need closer attention, effectively turning proxies into “leading indicators” of what companies need to consider in the future. According to this year’s report, then, the environment and international issues will continue to take center stage in company decisions.

Mirroring recent years, environmental issues comprised the bulk of the proposals considered by the Corporation. CCSR tackled several proposals for corporate sustainability reporting, in which companies are asked to assess their performance in the environmental and social spheres. Both committees abstained on or opposed resolutions for many corporations, including General Electric—a company whose size, ACSR members said, made such a report an “enormous task.”

The committees split when ACSR members voted to recommend corporate sustainable reporting for Safeway and Kinder Morgan and CCSR members abstained on the proposals for these companies.

Gray anticipated the sustainable reporting’s importance to proxy proceedings will continue to grow as shareholders raise questions about “how a corporation operates in relation to a larger environment.”

Shareholders also called attention to more specific corporate environmental concerns.

Dow Chemical was asked to report on its management’s new initiatives for survivors of the 1984 chemical accident at a plant in Bhopal, India owned by Union Carbide—now a subsidiary of Dow Chemical. The proposal said Dow Chemical has a “humanitarian responsibility” to address the disaster victims’ concerns, regardless of a lack of current liability.

And the committees abstained on a resolution that called for energy company Calpine to cease plans to develop geothermal plants in California’s Medicine Lake Highlands—land sacred to Native American tribes. The tribes, according to the report, are concerned with the impact on the region and their culture.

The committees also dealt with concerns about genetically engineered food products, voting down proposals for Kellogg, Yum! Brands and Safeway to report on their use of these ingredients. Such a review could instill fear in consumers who are unaware that competitors use these ingredients as well, said ASCR members. CCSR member D. Ronald Daniel is a former director of Yum! Brands, which owns KFC, Taco Bell and Pizza Hut restaurants. The two other CCSR members are James R. Houghton ’58 and Conrad K. Harper.

In addition to environmentally related proposals, international concerns also dominated the agenda.

The committees recommended that Boeing develop a human rights policy and report on its operations in China, but they divided on a proposal to have ExxonMobil disclose information about its oil contract with Equatorial Guinea. This call for disclosure came in response to a “60 Minutes” news segment, which alleged the company gave higher revenue shares to other African nations.

While ASCR narrowly recommended the proposal for ExxonMobil, CCSR abstained, citing the resolution’s poor wording—and instead, wrote a letter to the company’s management asking it to address the proposal’s concerns. CCSR member Houghton, a former chairman of the ExxonMobil, is a director on its board.

The committees also voted down a shareholder proposal for Caterpillar to evaluate whether it complied with its code of conduct for worldwide business when it sold—directly or indirectly—its equipment to the Israeli Defense Force. The equipment was subsequently used to destroy Palestinian homes in the Gaza Strip and the West Bank. Gray said that other groups that vote on proxies look to Harvard for its rationale when they vote.

“There are a lot of people who actually want this document,” she said. “There’s a kind of educational dimension to this whole thing.”