Harrington Investments, Inc. (HII) recently scored a success in the environmental sustainability movement resulting from dialogue we had with Intel Corporation. After introducing a binding bylaw amendment resolution to authorize the creation of a board committee on sustainability, we were approached by executives of this chip maker and they agreed to amend the Charter of the Corporate Governance and Nominating Committee to include “corporate responsibility and sustainability performance” into the committee’s overall policy responsibility. Intel also provided HII with an outside legal opinion stating that under Delaware Law directors have a fiduciary duty to address corporate responsibility and sustainability performance as specified in the committee charter. This is the only time that a corporation has agreed to amend their corporate charter due to a shareholder resolution filing.
In February of this year, we attended the Apple shareholder meeting to present our bylaw amendment authorizing the creation of a board committee on sustainability. Two years ago the same resolution at Apple received over 11% of the votes, however this year the vote tally came to only 5.18%. While we cannot introduce the same resolution next year, we will continue to address this technology company’s commitment to reduce its substantial negative environmental impact.
Teaming up with the non-profit organization, As You Sow, we presented a proposal asking the board of directors at Starbucks to adopt a comprehensive recycling strategy for beverage containers. We requested that the strategy include aggressive recycled content and container recovery goals for plastic, glass, paper and metal containers. The resolution also requested the board to prepare a report by October 2010 on company’s efforts to achieve recovery goals. The resolution received 11% shareholder support. As You Sow will continue the dialogue with Starbucks and we will support their work.
In mid May we introduced resolutions at Microsoft, Cisco and Oracle to create board committees on sustainability. We strongly believe that sustainability is a fiduciary duty and these companies should be held legally liable for any negative impact on the environment. This campaign should prove very interesting in light of our success with the same resolution at Intel Corporation as well as the fact that all three of these companies have been removed from the voluntary Global Reporting Initiative (GRI) Nasdaq Sustainability Index (QCRD) because they failed to disclose the minimum 40% of core GRI metrics needed to qualify.
In early May, we confronted the Goldman Sachs Board of Directors by introducing a shareholder resolution to limit excessive CEO compensation by restricting managers from exercising stock options prior to retirement. The resolution specifically required executives to retain 75% of the shares acquired through the Company’s compensation plans, excluding tax-deferred retirement plans, for at least three years from the termination of their employment. Twenty –five percent (25%) of shareholders voted in favor of this resolution.
Through our relationship with the non-profit Investors Suffrage Movement (ISM), we were also able to represent ISM on several corporate governance resolutions on behalf of other socially responsible investment firms including a “say on pay” resolution at Mylan Pharmaceuticals. “Say on pay” is a term used whereby a firm’s shareholders have the right to an advisory vote on the compensation of their executives. Company CEO, Robert Coury, was compensated over $16 million dollars in 2009 while revenues were down 1%. This resolution received 49.5% of the vote-half a percent more and it would have been adopted by a majority of shareholders.
A binding bylaw amendment proposal was submitted to Cisco on the issue of human rights. This resolution, filed for the third year in a row, addressed the issues of Cisco’s business relationship with China, a totalitarian government. It was introduced in an effort to prod Cisco directors into acknowledging and accounting for their company’s impact on human rights in China. Human rights and democracy advocates note that Cisco, Oracle, IBM, and Microsoft have been implicated in helping to build the “Great Firewall of China,” a Chinese government initiative that restricts and monitors the flow of information being transmitted over the internet within China. This resolution received approximately 5% of shareholder support.
Thanks to one of our clients, HII supported As You Sow Foundation by filing a proposal with Google this year requesting the company to develop principles for online advertising that go beyond current company statements and address the issue of collection of sensitive information in areas such health, finances, ethnicity, race, sexual orientation, and political activity for the purposes of behavioral advertising. This proposal did not receive the required 3% of the vote for resubmittal due to the founders’ overwhelming ownership position in Google and their vote against the resolution.
We recently added Chipotle Mexican Grill (CMG) to our equity list. CMG has shown a strong commitment to not only using organic and hormone free ingredients at reasonable prices but also making strides in using locally grown produce in their restaurants.
We also added to our equity list was Honolulu-based Bank of Hawaii (BOH). Our reason for selecting this bank holding company was due to their overall commitment for lending to small businesses, low income individuals, and minorities along with the fact that they refused an investment of TARP funds.