From the Summer 2013 Edition of Values

Much of Walden’s success in advocating for greater corporate responsibility and transparency comes from constructive dialogues with companies over many years, entirely outside of the resolution process. Yet sponsoring shareholder resolutions remains a primary tool for investors to influence company policies and practices. These resolutions can be an important impetus for change, as illustrated below.

Corporate Governance

Board Diversity

Technology company NetApp is among the small minority (10 percent) of S&P 500 companies currently without a woman director. Walden’s shareholder proposal asking NetApp to take additional steps to increase board diversity was withdrawn with an agreement to enhance disclosure in its proxy statement on the value of diversity as well as on implementation processes to help identify women and people of color for the director candidate pool.

Lobbying Disclosure
Comprehensive disclosure of corporate lobbying helps investors assess how a company’s lobbying activities align with expressed goals and commitments on an array of public policy matters. Shareholder proposals requesting better lobbying policies, disclosure, and oversight, including indirect initiatives through trade associations and think tanks, were submitted to 3MAccentureConocoPhillipsDevon EnergyIBM**JPMorgan Chase*PepsiCo*Time Warner Cable, and UPS.

Proposals at 3M and PepsiCo were withdrawn with agreements to expand lobbying disclosure substantially. While not formally introduced at the annual meeting, Devon Energy reported 23 percent support for the resolution. All the others went to a vote and received varying levels of shareholder support at company annual meetings: Accenture (31 percent), ConocoPhillips (26 percent), IBM (24.5 percent), JPMorgan (11 percent), Time Warner Cable (15 percent), and UPS (12 percent). While all of the resolutions received sufficient backing to keep the discussion going, Walden attributes the higher vote tallies, in part, to supportive recommendations from the major independent proxy advisors.

Sustainability/ESG Reporting
For the fourth consecutive year Walden filed resolutions requesting comprehensive sustainability reports at C.R. Bard and Gentex*, and a third-year resolution was submitted to Emerson Electric. In each case, the vote results in favor increased relative to 2012 at 35 percent (vs. 30.5), 36 percent (vs. 32.5) and 38 percent (vs. 35), respectively. While shareholder support slowly builds, Walden continues the dialogue with the companies on the merits and necessity of ESG reporting. Walden co-filed a proposal at Nike** for its annual meeting in September that aims to push ESG transparency throughout the company’s supply chain. Dialogue continues on this resolution, which asks Nike to encourage suppliers to publish their own sustainability reports.

A general dearth of ESG information at smaller companies has fueled targeted advocacy by Walden in recent years. In 2013, resolutions submitted to Coherent and Wabtec were withdrawn with their commitment to initiate sustainability reporting. The proposal at Simpson Manufacturing was backed by 33 percent of shares voted, an unusually high level that should help contribute to a constructive dialogue going forward. Although dialogue with Men’s Wearhouse* has progressed, the proposal will remain on the proxy ballot for a vote in late June.

Environmental Impact

Climate Change Mitigation
Walden was pleased to withdraw a shareholder proposal at Stryker that sought a comprehensive management plan addressing greenhouse gas (ghg) emissions. The company committed to fully assess ghg emissions at its facilities for baseline context and to set targets and goals for controlling emissions by year-end. In addition to disclosing ghg targets on its website, Stryker will also begin reporting this year to the Carbon Disclosure Project, the world’s largest public repository of corporate responses to climate change.

A first-time proposal at PNC Financial Services** asked the board of directors to report on the bank’s assessment of ghg emissions and climate change risk from its lending, investing, and financing activities. On the ballot despite PNC’s unsuccessful attempt to receive Securities and Exchange Commission approval to omit it, the resolution received significant shareholder support of 23 percent.

For several years Walden has co-filed a proposal with ExxonMobil** requesting the adoption of quantitative goals to reduce greenhouse gas emissions from its products and operations. This year’s results continue to demonstrate strong investor support with 27 percent of the vote in favor of the resolution.


Inclusive Non-Discrimination Policy
Proposals requesting East West Bancorp and j2 Global to amend their equal employment opportunity policies to include “sexual orientation and gender identity or expression” were successfully withdrawn when they agreed to modify their policies.
To increase our impact Walden often joins others on collaborative efforts.
*In order, Walden co-led these resolutions with the following clients and other investors: Sisters of St. Francis of Philadelphia, New York State Common Retirement Fund, Calvert Investments, and Trillium Asset Management.
**In order, these shareholder resolutions co-filed by Walden were led by: First Affirmative Financial Network, New York City Employees’ Retirement System et al., Boston Common Asset Management, and Sisters of Saint Dominic of Caldwell, NJ.