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What
is shareholder activism? Shareholder
activism consists of having dialogues with and filing shareholder
proposals at publicly traded companies. Dialogues often take
the form of letters or meetings with a company about an environmental
issue. To increase the chance of meeting with high-level managers,
shareholder activists often band together or with partner with
environmental organizations for expertise and clout. Shareholder
activism can also consist of going to company annual meetings
and bringing up topics of concern. Shareholder
resolutions are proposals introduced by a shareholder or group
of shareholders that are voted upon and discussed at the company's
annual meeting. Federal securities laws govern what issues can
and cannot be covered in a shareholder resolution (also called
proposals), and outline a host of rules associated with shareholder
proposals. Shareholders interested in introducing resolutions
should always work with experienced shareholder activists to
ensure that their resolutions comply with securities laws and
compliment other activist efforts. Environmental resolutions
rarely gain enough votes (50%+) to require company compliance,
but they are a good way to increase awareness, pressure and
media attention on a particular issue. For detailed information
on shareholder activism, see FoE's comprehensive guide. Are my
shares "good" for introducing a shareholder resolution? To file
a shareholder resolution, you must own at least $2000 worth
of voting stock for at least one year by the time of the annual
meeting (typically April-May). "Voting stock" is often
Class A common stock, not preferred stock. If you don't know
what stocks you own, how much you have, and/or how long you've
had it, ask your broker or financial advisor. If you decide
to file a resolution, you must demonstrate proof of ownership,
which can be provided by your broker. Proof of ownership can
consist of a print-out (you may black out the names of other
companies you own for privacy) and letter on your broker's letterhead
stating the number and class of shares you own, as well as how
long you have held the stock. You also must hold these shares
through the date of the next annual meeting. So I
own voting stock, and I've had it for a year; now what? FoE will
coordinate the resolution on your behalf. You will not have
to deal with the company personally, as all company correspondence
will go through FoE. To participate: First, state
in writing that you are giving FoE permission to coordinate
the shareholder resolution on your behalf by completing a letter
of authorization. Keeping
a copy for yourself, send us the completed authorization letter,
along with your proof of ownership. We will
then file the resolution on your behalf, using FoE letterhead
and amassing the names of all FoE members in one letter. We
will sign the letter "Your name, Member, Friends of the
Earth." We will also attach copies of your proofs of ownership. We will
send you a copy of the final filing letter. After
the resolutions are filed, then what? December/January:
Often, after a resolution is filed, the company invites the
filers to sit down and negotiate, in an effort to get the shareholders
to withdraw the resolution. If the company promises to begin
taking steps requested in the resolution, we will withdraw the
proposal. If the company does not agree to take our requested
steps, then we will keep the resolution on the table. Usually,
if a resolution is filed and management is not amenable to negotiation,
the company will try to "throw out" the proposal.
The company tries to prove to the Securities and Exchange Commission
(SEC) that the proposal is inappropriate, while the filers rebut
those claims and argue that the proposal should remain on the
ballot. During this time, FoE and other filers will defend the
proposal. January/February:
The SEC will make a decision about whether or not the proposal
must be included in the company's annual meeting voting ballot,
or proxy statement. If the SEC does not rule in our favor, then
the resolution will not be voted upon. However, shareholders
can still attend the meeting and ask questions about the issue
the resolution was to address. If the SEC does rule in our favor,
then the resolution gets circulated to all shareholders for
a vote. April/May:
If our resolution "makes it" onto the shareholder
ballot, then we have to work to garner votes for it. FoE will
work to get large investors, such as pension funds, to vote
in favor of the proposal. FoE members can likewise urge their
friends, churches/synagogues, schools, etc. to vote in favor
of their proposal. When you get your proxy voting materials
in the mail, make sure to vote and send it in. If your broker
or financial advisor handles all your investments, you may need
to inform him/her of your intention to vote in favor of green
shareholder resolutions. (FoE provides an online list of green
shareholder resolutions in the early Spring, so you may want
to check it out.) You may even think about attending the shareholder
meeting, if it's close by. Company meetings are often held in
April or May. June/July:
FoE will provide you with an update on the year's shareholder
activism efforts. At this
point, you may want to consider a year-end donation of stock
to Friends of the Earth as a way of reducing capital gains taxes
while providing FoE with company ownership and the opportunity
to file shareholder resolutions as an organization. Who can
participate in FoE's shareholder activism program? Once you
are a member of FoE, you can get involved in our shareholder
activism program by printing and filling out two forms. Then
mail them to Friends of the Earth. Contact:
Michelle Chan-Fishel |
