Active Ownership Successes 2

Shareholders Press Dillard’s on Vendor Standards
CBIS was the lead filer of a resolution with Dillard’s, one of the nation’s largest fashion apparel and home furnishings retailers, that asked the company to adopt a sourcing policy for vendors based on the United Nations’ International Labour Organization standards and to commit to a program of independent monitoring of vendor facilities. While CBIS is pleased that Dillard’s recently updated its ten-year-old policy, we believe it needs to incorporate more features that are now widely accepted as best practices among other retailers sourcing on a global basis. Other institutional investors agreed. Our resolution received crucial support from Institutional Shareholder Services, and in early October, Dillard’s reported that the resolution received 46.4% of votes cast — a very strong result that we hope persuades Dillard’s management to change its policy of non-engagement with shareholders on the issue. We look forward to continuing our dialogue with the company.

Cisco Vote Highlights Excessive Executive Pay
CBIS participants and other faith-based shareholders are concerned that the unchecked and growing concentration of wealth and privilege in corporate America does not promote the common good — either economically, ecologically, socially or politically. In 2006, CEOs reportedly earned 179 times as much, on average, as rank-and-file workers, about double 1994’s 90-to-1 ratio, according to a recent study by the Congressional Research Service. A June 2007 Bloomberg/L.A. Times poll found that 81% of Americans think CEO compensation is too high. And the perception of inequity is only magnified when stock option windfalls and big bonuses are driven by layoffs and outsourcing.

CBIS was lead sponsor of a first-year resolution at Cisco Systems, one of the world’s largest high-tech companies, asking it to allow shareholders to express an opinion about senior executive compensation through an annual advisory vote. Several large companies, including Aflac and Verizon, have agreed to adopt such a “say on pay” policy and many others are working with investors to create one. Resolutions asking companies to establish these policies received between 40%-50% favorable votes in 2007, showing broad shareholder support for the issue. Our resolution received support from nearly half of Cisco’s voting shareholders, with 48% of the votes cast in its favor.

Coke Advances Human Rights Policy
One of the most visible SRI successes in recent years was our 2006 breakthrough with Coca-Cola whereby the company agreed to revise and strengthen its human rights policy by incorporating independent monitoring and local community engagement, and by applying the policy to its bottler network around the world. Coke began compliance training and monitoring during 2006. In 2007, it performed compliance audits at a substantial number of its bottler facilities, and an increasing number of bottlers are adopting the new policy. In early 2008, we will begin a review of audit results.