One of the most prominent active ownership successes in 2009 was the 51.4% majority vote at global tech giant Cisco Systems’ annual meeting for CBIS’ resolution asking the company to subject executive pay decisions to an advisory vote by shareholders. Excessive executive pay, which is often insufficiently linked to long-term company performance or to the impact on society from the corporation’s business practices, reached new levels of public concern amidst the recent financial crisis. Clearly aligning the interests of executives with those of shareholders and the general public is increasingly being viewed as a priority issue. CBIS began addressing this issue at Cisco in 2007. The majority vote at last fall’s meeting sends a clear signal to Cisco’s board that shareholders strongly favor executive compensation reform. A number of leading technology companies have already adopted such non-binding advisory votes. We call on Cisco to be just as responsive, and we have asked the company’s board to issue a statement outlining how it plans to acknowledge the shareholder concern demonstrated by the support our resolution received.
Investors filed approximately 75 “say on pay” proposals in 2009. Votes averaged more than 46% in favor, and more than 25 companies had votes over 50%. More than 55 companies have voluntarily adopted advisory vote policies, including Apple, Microsoft, Hewlett-Packard and Intel. In addition, nearly 300 Troubled Asset Relief Program (TARP) participants established an advisory vote in 2009. In July 2009, the U.S. House of Representatives passed the “Corporate and Financial Institution Compensation Fairness Act of 2009,” which will require such votes at all public companies. The bill is expected to go before the Senate in 2010.
In 2009, CBIS withdrew a resolution we co-filed at Chevron asking the company to adopt targets for reducing greenhouse gas emissions. Chevron has agreed to establish an emissions reduction goal, discuss plans to track the carbon content of its products, and integrate the cost of carbon into new investments. We believe Chevron has made significant progress and meaningful commitments on these issues in recent years. Chevron has also agreed to continue a dialogue with shareholders on other important topics, including its impact on the communities in which it operates and environmental concerns relating to its work in the Canadian oil sands region.
In 2008, we withdrew a CBIS-led resolution asking nationwide fashion apparel and home furnishing retailer Dillard’s for a corporate sustainability report, since the company agreed to require better protections for workers at factories that produce its clothing and to issue a report that describes ways it assesses labor rights at vendor facilities. In 2009, the company created an initial draft and has asked shareholders including CBIS for comments.
Clearly aligning the interests of executives with those of shareholders and the general public is increasingly being viewed as a priority issue.