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How shareholder resolutions influence corporate behavior

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Benton: The process begins when there's an issue of concern for our clients. We look at what the issue is and how it may impact the companies in our portfolio. Once we've determined what that impact might be and believe there's a long-term business case for why one of our companies should be concerned about the issue, we approach the company. We say, as an example, "We're concerned that your nondiscrimination policy doesn't include sexual orientation. We believe that this is something you should pay attention to because you're not going to be able to attract the best employees. You may be alienating your customer base. You may be breaking local laws depending on where your operations are."

Then what happens?

Benton: They have a couple different ways they can respond to us. They can ignore us, which happens sometimes. They can constructively engage with us and sit down with us. If they're ignoring us or strongly disagreeing with our viewpoint, we have one more option, which is the shareholder resolution.

So you'd prefer not to get to the resolution stage.

Benton: The resolution process is the most public aspect of what we do. But far more often, we're having constructive conversations with companies. The first one that's coming to mind is TJX, a local Massachusetts-based retailer [which operates T.J. Maxx and other chains]. We filed resolutions with them two or three years ago on vendor standards and how they were [monitoring labor and other practices of] their supply chain. Over time, we've built a relationship with them and they've ramped up their understanding of our concerns to such an extent that we check in two or three times a year and they report back to us on what they're doing. And so this year, there was no resolution on the ballot.

Most shareholder resolutions fail, right?

Benton: No resolution is binding. So we could get a 99 percent vote and the company's under no obligation to make the suggested change. [But] a 30 percent vote is extraordinarily high. It represents a very strong upswell of investor support for an issue.

Does minority support - say, 30 percent - have an impact?
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