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By ROBERT TRIGAUX
© St. Petersburg Times, published July 1, 2001
Did your favorite company get roughed up by angry shareholders at its last annual meeting?
Maybe it should follow NetSol International's strategy. The embattled California software developer tried to derail a fight with dissident shareholders by moving its annual meeting -- not to a different city in California or another state, but to Pakistan.
Pity America's poor chief executives. Once a year, each CEO of a publicly traded company must leave his lofty perch and briefly come face to face with some of his shareholders -- imagine, the owners! -- of the very company he runs.
Most of the Tampa Bay area's public companies went unscathed through the brisk spring season of shareholder meetings. They were lucky.
Nationally, many CEOs encountered a startling range of activist shareholders and protesters irate over such subjects as poor workplace conditions, runaway executive pay, the environment, abuses of technology and -- lest we forget -- plain old poor financial performance.
What's a poor CEO to do? Some, such as NetSol's, tried to run and hide. Others this spring opted for intimidation, ringing their meetings with guards or imposing harsh time limits on the comments of critical shareholders.
At its annual meeting in Brandon, Illinois-based Household International braced for a small busload of protesters upset over predatory lending practices by ringing its office with private guards and police.
In downtown Seattle, Starbucks celebrated a stock that climbed 2000 percent in value in less than a decade. But outside, two dozen protesters handed out fliers complaining about Starbucks' dependence on serving milk containing bovine growth hormone and pastries with genetically altered ingredients.
In Orlando, shareholders gathered for Lucent Technologies' meeting in February -- months before it announced draconian job cuts -- and many could be heard making Mickey Mouse and Goofy jokes about the faltering company.
To most CEOs and their corporate boards, shareholders have little clout and are about as bothersome as gum stuck to the bottom of their polished wingtips.
But in a national sampling of annual meetings, those ignored shareholders clearly are not going away. In many cases, their concerns seem to be gathering steam.
Why? The list of reasons is growing. More investors are becoming stock savvy. After a long stock market boom, many are quickly annoyed by poor corporate performance. And the remarkable disconnect between CEO pay and CEO performance, a rallying cry nationwide, quickly became this year's No. 1 topic of shareholder resolutions.
Also, the rise of the Internet has empowered more shareholders. The Net gives them quick access to corporate and legal documents, as well as a worldwide link to other shareholders with like interests via e-mail and message boards. And pro-shareholder Web sites are proliferating.
Getting results is still fairly rare. But activists say their goal is incremental. A resolution trounced by shareholder vote this year may get better consideration next year. Or the next.
Large corporations in foreign markets must deal with an especially complex set of shareholder activism. At their spring annual meetings, multinational companies frequently faced questions, proxy resolutions and protests about sweatshops in developing countries, global warming, globalization, and concerns about the loss of national pride and culture.
In fact, many of the issues that emerged a few years ago in the violent street protests in Seattle (against the World Trade Organization), in Washington (against the International Monetary Fund) and in Prague (against the IMF and World Bank) are the same hot buttons now confronting multinational annual meetings. Consider these recent examples:
At the General Motors annual meeting last month in Delaware, five union members of the Korean Metal Workers' Federation, some wearing bandannas inscribed with "No GM," greeted GM shareholders with letters opposing GM's takeover of Daewoo.
In Berlin, angry German shareholders lambasted management at DaimlerChrysler's annual meeting in April for its money-losing expansion effort, including -- in a slap to U.S. industry -- the acquisition of now-collapsing Chrysler. At an annual meeting lasting more than 12 hours, more than 10,000 rowdy shareholders blasted CEO Juergen Schrempp for what they described as the biggest destruction of capital in German corporate history.
In Seattle, Nordstrom -- soon to open its first store in the Tampa Bay area -- defeated a shareholder resolution seeking assurances the company was not doing business with Asian manufacturers who use forced, convict or child labor. Other retailers, including Wal-Mart, Dillard's, Ann Taylor and Sears, also encountered shareholder resolutions aimed at improving overseas working conditions.
The New York-based Interfaith Center on Corporate Responsibility, trying to improve conditions for factory workers in developing countries, wants to pressure U.S. companies to raise wages at assembly plants in Mexico. Last week, the group said it has told several companies with operations in Mexico, including General Electric, Ford Motor and Alcoa Fujikora Ltd., of its plan to makemaquiladora wages an issue with U.S. company shareholders.
Increasingly, shareholder activism is being embraced by institutional investors that represent pension funds with big stakes in many corporations.
Among the most active is the California Public Employees' Retirement System. Calpers this spring targeted five companies for poor financial and corporate governance performance. They are Warnaco, the New York (and now bankrupt) manufacturer and distributor of Calvin Klein and Speedo clothing and other branded apparel; Circuit City of Richmond, Va.; Lance of Charlotte, N.C.; Metromedia of East Rutherford, N.J.; and Ralcorp of St. Louis, Mo.
Sometimes, a company's biggest protesters are its former employees.
When New York's Citigroup held its annual gathering at Carnegie Hall, the National Organization for Women met outside to protest various Citigroup activities, including its treatment of female and minority employees. And a group of women who have gender bias claims against Merrill Lynch & Co. dominated that company's annual meeting with questions and complaints about the status of Merrill's efforts to improve the work environment for women.
This year's drumbeat of annual meeting protests goes on.
Green groups and such minor celebrities as Bianca Jagger launched a campaign to persuade drivers to shun Exxon Mobil until the oil company changes its skeptical stand on global warming.
Hershey Foods shareholders were asked to vote on a resolution calling on the company to discontinue the use of genetically engineered ingredients.
At Boeing's final shareholders meeting as a Seattle-based company (it's relocating its headquarters to Chicago), engineers protested outside as one shareholder asked if Boeing was changing its name to "Going."
All in all, this spring season of annual meetings was a doozy. All signs point to growing unrest in the shareholder ranks. And that means more contentious shareholder meetings in the United States and abroad in the years ahead.
Pity the poor CEO. If only there were some way to avoid all those pesky shareholders.
Well, Delaware, the corporate lovefest state, has an idea. The state legislature passed a law last year that allows companies incorporated in Delaware (and there are many) to conduct annual shareholder meetings electronically.
With a click of the mouse, could some noisy shareholder activist be vanquished from an online annual meeting?
Sounds like a CEO's dream.
- Robert Trigaux can be reached at email@example.com or (727) 893-8405.
Florida newest turf in lending hostilities (May 9, 2001)
Watch out, Citigroup, these students will tan your hide (March 16, 2001)