The Greening of Annual Meetings
Where hot topics in the 1980s related to takeover attempts, environmental issues are big today
WHEN shareholders of Ford Motor Company meet in Detroit in early May, they'll be talking about environmental concerns as well as cars. Reason? A shareholder public interest group - "Ceres" - plans to attend, reminding Ford of its need to ensure responsible environmental policies. Ford will be one of at least 39 companies where Ceres - The Coalition For Environmentally Responsible Economies - will be initiating shareholder actions. Other annual meetings that Ceres will attend, says spokesman Michael Fleming, include those of American Cyanamid, Cooper Industries, International Paper, PepsiCo, and Union Pacific.
Ceres, based in Boston, is made up of investors controlling some $150 billion in pension and mutual fund assets. Members include the National Wildlife Federation, Sierra Club, National Audubon Society, New York and California state pension funds, and religious groups.
"Many of the companies we'll be attending have fairly decent environmental records," Mr. Fleming says. "Some companies will be asked just to file environmental reports" and sign a 10-point "code of conduct" on environmental behavior. Others will be asked to adopt specific policies. Sometimes the goal will be "to demonstrate to the companies that a large portion of their shareholders are deeply committed to environmental reform."
Welcome to the world of corporate annual meetings, 1991-style! The fact that environmental issues are expected to be among the main concerns at many meetings this year underscores the deep changes that have occurred in the global economy since the bullish 1980s, say corporate experts. Environmental issues have become more important, reflecting soul-searching at many companies since the 1989 Exxon Valdez oil spill. Many companies are thinking "green." McDonald's, for example, is introducing a low-fat bur ger and scrapping foam containers as a result of pressure by public interest groups.
During the 1980s, hot topics at annual meetings related largely to mergers and acquisitions, such as shareholder efforts to get rid of "poison pills" - corporate strategies designed to foil takeovers.
Given today's recession, there will be more questions this year about management practices of companies, says Paul Karr, a partner with Deloitte & Touche, a national accounting firm.
Management pay at issue
In light of lower corporate earnings, other lively issues could be directors' fees, and management compensation and benefits.
Thousands of annual corporate meetings are held each year, it is estimated. Most occur from March through May. Many are merely cursory, with officers of public companies getting together briefly to satisfy corporate accountability requirements.
Since the 1960s, however, annual meetings at some large corporations have become media showplaces for shareholder activists: "reform" groups pushing for greater accountability; dissidents seeking to actually take over a company; political groups bent on altering various company policies, such as those regarding South Africa, or the hiring of women and minorities.
The annual-meeting climate appears relatively calm this year, experts say. A survey of major corporations by the National Investor Relations Institute (NIRI), an interest group representing investor-relations officials, finds most companies expecting shareholder activism to remain about the same this year as last year. Slightly less than half the companies responding believe that activism will actually grow, says William Mahoney, editor of "Investor Relations Update," a monthly magazine of the NIRI.
Shareholders seek power
According to the survey, the leading issue for 1991 is greater access to the proxy system by shareholders. Other key issues include ending staggered board terms and the payment of "greenmail" - i.e., using company funds to fend off a takeover. Shareholders also want greater ability to influence boards.
Many corporations now see shareholder activism as beneficial. No respondent felt that activism posed "a serious detrimental challenge to corporate control." Most annual meetings, Mr. Karr says, "are not all that exciting." Still, at most companies, he says, management now spends a significant amount of time preparing for the unexpected at their annual meeting.