Glass ceilings, climate change, corporate nondiscrimination policies, labor standards, human rights, director elections. These are some of the issues Walden is tackling on behalf of our clients through shareholder actions¾ primarily corporate dialogues and proxy resolutions¾ in pursuit of greater corporate responsibility. (See Walden’s 2004 Shareholder Initiatives below.) As in previous years, our 2004 initiatives are moving ahead with mixed results: several clear victories, a number of "works-in-progress," and some corporate opposition.

Successful negotiations have led to the withdrawal of four Walden-led shareholder resolutions thus far in the 2004 proxy season. Stryker and Dover adopted inclusive nondiscrimination policies that explicitly prohibit discrimination based on sexual orientation. A hopeful backdrop to the divisive national debate on gay marriage, these companies now join the more than 70 percent of Fortune 500 firms with inclusive policies, according to the Human Rights Campaign.

SBC Communications and Bell South agreed to corporate governance reform on director elections that promote greater board accountability to shareholders. Both companies adopted a new policy to place the entire board of directors up for election each year, as opposed to putting a portion of directors up for election annually in a staggered or classified board structure.

These four companies’ changes represent shareholder actions that led directly to adjustments in policies, important corporate change victories that never appeared on the proxy ballots. But there are other kinds of success stories too. Walden’s first resolution to go to a shareholder vote this year, a proposal calling upon Costco to move to annual director elections, passed with the support of nearly three-quarters (226 million!) of the shares voted. Costco co-founder and board member Jeff Brotman committed to study the issue and report back to shareholders within the year. Brotman subsequently told a reporter that he believes Costco’s board does not need to be changed but that "the pendulum is swinging because so many corporate boards were corrupt." (Twin Falls, Idaho, Times-News Online, 2/4/04.)

A relatively new dialogue has emerged with the announcement last fall of the

proposed mega-merger between Bank of America (BofA) and FleetBoston Financial. Coordinated by Boston Common Asset Management, Walden and other investors have been talking with senior executives to address the impact of the merger on employment, community reinvestment, philanthropy, environmental stewardship, and other issues. BofA and FleetBoston have engaged with investors in an open and respectful manner. Examples of their commitment include maintaining the current employment levels of FleetBoston in New England; pledging $750 billion to community reinvestment and $1.5 billion in philanthropic grants over 10 years; and continuing to be an active endorser of the CERES environmental principles. We are evaluating these and other commitments to understand their likely impact on programs currently in place.

Also, for years Walden has been watching both banks for progress in equal employment opportunity and diversity, especially after BofA’s previous merger with the former NationsBank. BofA has promised to continue to share detailed diversity statistics, consistent with an agreement made with Walden in 2002. Moreover, BofA articulated a goal to "have diversity in senior management mirror our middle management diversity within five years," a novel and exemplary approach to remove glass-ceilings faced by women and people of color.

There is also progress in a continuing Walden-led discussion with The Home Depot calling for assurance that handmade carpets sold in its Expo stores are not made with illegal and egregious child labor. The home improvement giant has hired an outside consultant to evaluate the independent monitors of carpet looms, such as RUGMARK, and has affirmed its intention to partner with one after concluding its due diligence.

Finally, as is true every year, we sometimes face obstacles in our corporate initiatives. Our efforts to engage American International Group and Chubb in a dialogue on insurance industry risks and opportunities associated with climate change resulted in shareholder resolutions that were omitted by the Securities and Exchange Commission (SEC) on "ordinary business grounds." Fortunately, Chubb and AIG are keeping the door open for continued shareholder input. And there is a silver lining: The SEC decision to exclude our resolutions is fuel for institutional investors who are seeking changes in SEC rules to strengthen corporate environmental disclosure. —H. Soumerai