EMERGING ISSUES: Summer 2002
SOCIAL TOPICS (Archive): EMERGING ISSUES
Published, Summer 2002
By Scott Klinger
The cost of a ticket to a Bon Jovi concert: $100
The cost of airfare to Orlando and admission to Disney World: $738
The cost of democratic public discourse: Priceless
Where can you take in a Bon Jovi concert for free? Where can you and your children shake Mickey Mouse's paw without flying cross-country and paying a whopping admission fee? If you guessed corporate annual meetings, you're right!
Rather than addressing growing controversies about Latin American labor and questions about lowering the pay-for-performance hurdles that guide its CEO compensation, Coca-Cola filled its Madison Square Garden annual meeting with the live music of Jon Bon Jovi and Wynton Marsalis. When the two-hour entertainment extravaganza ended, there was only 30 minutes left for presentation and discussion of the three company resolutions and four shareholder resolutions on the company's ballot.
Mickey Mouse greeted shareholders entering Disney's annual meeting in Hartford, Connecticut. Mickey, joined by Peter Pan and Belle from Beauty and the Beast later danced through the midst of the annual meeting. As Disney's Chief Financial Officer gave his report, which quietly mentioned the company's loss last year and layoff of workers, huge 30-foot screens played highlights of Monday Night Football and NYPD Blue. For those interested in corporate governance, they had a 20-minute "feature presentation" tagged onto the end of a two and a half -hour commercial.
EMC Corporation went so far as to spearhead an effort in Massachusetts to change the state's business law to allow companies broadcasting their annual meeting over the internet to dispense with their in-person annual meetings all together. Activists and social investors, including Walden and United for a Fair Economy, caught wind of the bill and organized to block it only hours before its final passage. Subsequently, EMC successfully appealed to the SEC for permission to exclude a shareholder proposal asking the company to commit to in-person annual meetings. The SEC ruled that whether or not to hold in-person annual meetings was a matter for management alone to decide. On the other hand, EMC's annual meeting yielded some historic changes. (See EMC: A Season of Firsts in Summer 2002 issue of Values.
Other firms attempted to impede democratic dialogue by moving their annual meetings to faraway venues. Morgan Stanley moved its to London, England; Household International to London, Kentucky; two hours from the nearest commercial airport. Household faces a growing public outcry over its predatory lending practices. They run such a tight ship at Household that they couldn't afford Garth Brooks as a distraction and had to hang out in the countryside instead.
Not all companies have sought to deflect questions of corporate social responsibility. Sanford Weill, CEO of Citigroup, stood on a bare stage at Carnegie Hall adorned only by a single Citigroup banner. In stark contrast to Disney and Coca-Cola, more than two hours of Citigroup's annual meeting was devoted to discussion of substantive issues of corporate governance and social responsibility. No shareholder was rushed and all questions were taken. Mr. Weill's remarks on the state of the business took ten minutes.
How can social investors encourage corporations to partake in open public dialogue? First, social investors can insist that annual meetings remain a venue for open dialogue and exchange. They can praise companies like Coca-Cola for their openness to private dialogue, but they also should hold such companies accountable when they fail to meet the mark of open, public discourse. Second, social investors should be vigilant against attempts to banish annual meetings to cyberspace. Lastly, social investors should begin to assess a corporation's role in democratic society: how does it use its political influence through lobbying and campaign gifts, and how does it promote open debate of its policies and practices in the public realm, including the annual meeting.
Scott Klinger is co-director of the Responsible Wealth project of United for a Fair Economy, where he coordinates shareholder activism on CEO pay and corporate governance issues.
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