updated 4/13/2005 7:30:42 AM ET 2005-04-13T11:30:42

Spring is in the air, and American corporations are busy sending out proxy statements for shareholders to vote on at their annual meetings, which typically take place in April and May.

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The weather may be lovely, but U.S. companies shouldn’t expect an easy time of it over the next two months. Early indications are that this year, shareholder advocacy groups are no less determined to effect change than in years gone by.

A total of 211 shareholder resolutions on social and environmental issues are pending for the spring 2005 proxy season, matching the record number of 210 such resolutions seen at the same point in 2004, according to data from the Investor Responsibility Research Center, a consulting and proxy services firm based in Washington.

"The day of the sleepy, passive investor is being left behind,” said Tim Smith, president of the non-profit Social Investment Forum and senior vice president of Walden Asset Management, a socially-responsive investment firm.

Target: Exxon Mobil
Big U.S. companies like Exxon Mobil, the largest U.S. company by stock valuation, are finding themselves in shareholder groups’ crosshairs.

This year, investor groups focusing on environmental issues are making the oil giant a prime target, with three resolutions backed by social investors expected to be on the company’s proxy statement at its May 25 annual shareholder meeting.

One resolution asks the company to publish scientific data on climate change, another asks Exxon to report on how it will meet the greenhouse gas reduction targets in countries in which it operates that have adopted the Kyoto Protocol. And a third asks the firm to seek independent members for its board of directors who have expertise in the oil and gas industry.

Additionally, the non-profit Civil Society Institute has launched a Web site that allows shareholders to send targeted e-mails encouraging their mutual funds to support global warming resolutions at the company.

Pam Solo, president of the Civil Society Institute, notes that as of last year, mutual funds are required to disclose to investors how they vote on proxy issues.

“We want people to speak up and hold mutual fund companies’ feet to the fire when it comes to Exxon Mobil,” Solo said. “The business community is most likely to change when it gets a clear message that consumers and investors demand action.”

The environment, and global warming in particular, is one of the top categories for shareholder resolutions this year. Other key shareholder issues include disclosure of political contributions, fair employment practices and animal welfare.

Shareholders on a roll
When it comes to global warming initiatives, shareholder groups are on a roll. Ecologically focused mutual funds and public pension funds in states like California, Connecticut and New York are joining in the drive to pressure big energy companies into releasing data on greenhouse emissions and showing how global warming regulations affect them financially.

Their message is simple: Climate change is not only an environmental issue, it’s also bad for the bottom line, and so companies have a fiduciary duty to shareholders to identify their risk and reduce their exposure.

Support for the issue is growing according to Mindy Lubber, president of the Coalition for Environmentally Responsible Economies or CERES, an environmentally oriented shareholder group. She points to the power of the Investor Network on Climate Risk, a coalition that includes several large pension funds, which has collective assets worth $1.3 trillion.

“These investors are not tree-huggers; they are not environmentalists or activists with a political agenda,” Lubber said. “They are state treasurers, they are comptrollers and they are pension fund managers who are carrying out their fiduciary duty to follow the long-term whishes of their shareholders.”

This year, 41 global warming resolutions have been slapped on a handful of companies in sectors as diverse as oil and gas, electric power, manufacturing and financial services. The list of companies affected includes well-known names like General Motors, ChevronTexaco, Newell Rubbermaid, J.P. Morgan Chase and Wells Fargo, according to CERES.

Majority voting issue
Another hot shareholder issue for 2005 is a resolution asking for a majority vote to elect corporate directors.

At present, most candidates standing for re-election to a company’s board face no competition. A single “yes” vote normally will get them chosen, no matter how many shareholders oppose their candidacy. In fact, in many companies do not even offer shareholders the option to vote against a candidate.

Now shareholder groups want to change that and establish a system that more closely resembles standard elections, where a candidate must receive a majority of votes cast to win.

The issue gained some heavyweight support, including Institutional Shareholder Services, a proxy advisory firm, and the giant California Public Employees' Retirement System pension fund. It is likely to see its first showdown when industrial giant Caterpillar’s annual shareholder meeting, scheduled for Wednesday.

“This is not a new issue, but it’s an issue with legs,” said Smith. “We’ve seen a dozen or more ballots withdrawn because companies have agreed to set up a working group with shareholders and come to a resolution on the issue, but there are about 65 ballots still out there, and the issue has a very strong logical case.”

Improved dialogue
Although shareholder activists are gearing up for a busy proxy season, not all of the announced resolutions will make their way into company proxy statements.

In a post-Enron push for more boardroom accountability, shareholder advocacy groups are using the occasion of the company annual meeting to urge corporate leaders to adopt new policies along religious, socially responsible or environmental lines.

But in an encouraging sign for activist groups, analysts say sponsors are withdrawing their resolutions, having convinced a company to at least consider their proposal, thus averting a potentially acrimonious proxy fight.

In response to complaints from shareholders, for example, Ford Motor recently said it will write a report about global warming, including details on emissions from Ford vehicles and factories.

“I think companies are more willing to talk [to shareholders] this year,” Smith said.

“It’s not like this year is very different; there have always been numerous companies willing to go for a settlement situation,” Smith added. “So we’re not seeing a sea change here, but this is not insignificant and by the end of this year’s proxy season I wouldn’t be surprised to see a quarter or a third of shareholder resolutions withdrawn.”

Reuters contributed to this report.


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