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A record year for shareholder activism

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Beyond resolutions, however, lies an array of other tools in the shareholder activist's toolbox. And what activists find most inspiring about the current climate is the potential for influencing corporate policy without going the resolution route.

"I don't like to use shareholder proposals because you're starting out in a combative position," says Frank Rauscher, president of Aquinas Funds, a mutual fund for advancing Roman Catholic social causes. "We've been very successful, especially in the past few years, through dialogue alone." For example, the fund company sent a letter to Merck & Co. management outlining the liabilities potentially associated with the manufacture of the RU-486 "day after" abortion pill. That was all it took to obtain a statement that the company would not manufacture it, Mr. Rauscher says.

Since shareholders own portions of public companies, each has a right to vote on nominations for boards of directors and other proposals presented at annual meeting. Proxy forms sent in the mail enable shareholders to vote without attending in person. What's more, anyone who owns $2,000 or more in stock can, according to the Securities and Exchange Commission, draft and present a proposal for consideration by all shareholders.

In general, proposals aimed at social or corporate governance issues come from attorneys or specialized firms hired by major institutional investors, such as universities, unions, or state pension funds. But individual investors are making their voices heard as well by teaming up with coalitions of like-minded investors and using collective clout to advance their agendas.

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