First Affirmative Shareholder Resolution Update

A few months ago we asked for advice or input on priorities for shareholder advocacy. The five issues that rose to the top of the list included climate change, human rights, executive compensation, environmental health and access to healthcare and drugs. We have been quite busy researching resolution opportunities within our Folio Institutional client base and working with our partners to co-file resolutions on issues that meet our priority criteria and the SEC filing criteria. We wanted to provide you with an interim report on the shareholder season. Many of the filing deadlines were last fall/winter. We are still considering a number of resolutions for co-filing in the next few months, but the list below represents the majority of resolutions we will be co-filing in the 2009/2010 season.Of note is that this year companies are challenging quite a number of resolutions, and it appears they are testing the resolve and limits of some of the SEC rulings that have come out that give activists more leverage in filing resolutions on certain issues, including climate change. This is making it more interesting, time-consuming and costly to file resolutions! Many of the challenges are still outstanding, and we will keep you posted as the SEC makes decisions about whether the resolutions will stand. With one exception, all of the resolutions listed have already been filed. Lead filers are listed for each company. If there has been any action such as a challenge or withdrawal, we note this. Over time, some of these resolutions may be withdrawn while others go to vote. We will keep you informed as the season continues and annual meetings begin to take place. If you are interested in seeing the actual resolution text or want more information about a specific action, feel free to contact Holly Testa ( or Christie Renner (

Environment/Climate change

Aqua America, sustainability report - Calvert Resolution requests company produce a sustainability report that meets Global Reporting Initiative guidelines. Water utilities such as Aqua America face special challenges and risks due to aging infrastructure and water scarcity.

Chesapeake Energy, report on hydraulic fracturing operations - Green Century Shareholders request that the Board of Directors prepare a report summarizing the environmental impact of fracturing operations, potential policies for the company to adopt, above and beyond regulatory requirements, to reduce or eliminate hazards to air, water, and soil quality from fracturing, and other information regarding the scale, likelihood and/or impacts of potential material risks to the company’s finances or operations.

Chesapeake Energy has challenged this resolution on many different fronts, and a decision is pending at the SEC. Included as part of this challenge is questioning the authority of First Affirmative to file this resolution on behalf of its clients. Chesapeake Energy is obviously spending a lot of attorney dollars to keep this resolution from appearing on their proxy.

Conoco Phillips, disclosure on oil sands operations - CalSTRS Resolution requests that a report be prepared to disclose environmental damage that would result from expanding oil sands operations in Alberta, Canada's boreal forest.

Google, sustainability reporting - Trillium Resolution requests that Google produce a sustainability report. Google is one of several companies being targeted by a sustainability report campaign this year.

JPMorgan Chase, review carbon principles implementation - Boston Common Shareholders request that the Board review JPMorgan’s implementation of the Carbon Principles and, where necessary, amend JPMorgan’s policies and practices to ensure alignment with the Carbon Principles’ benchmarks for risk measurement.

This resolution has been challenged by JPMorgan Chase under the ordinary business exclusion, and a decision is pending at the SEC. In the meantime, we have participated in discussions on how to approach negotiations with JPMorgan Chase, and Boston Common submitted a letter outlining grounds for withdrawal of the resolution. It appears JPMorgan Chase may be willing to compromise to the point allowing us to withdraw.

Kroger, supply-chain risks - Calvert Resolution requests that Kroger asses and manage the impacts of climate change on the corporation, with specific regard to its supply chain, and plans to disclose such information through public reporting mechanisms.

Pepsi, adopt effective recycling strategy - Walden Resolution requests that Pepsi review the efficacy of its recycling strategy. They appear to be behind their competitors, and they are on record as opposing any container deposit laws.

RR Donnelly, adopt sustainable paper purchasing policy - Domini Shareholders request the Board to develop a sustainable paper purchasing policy, including plans for implementing the policy and reporting progress. Donnelly is a major printing services supplier, and is therefore a major paper purchaser.

Smuckers, supply-chain risks - Calvert This is another supply-chain resolution, substantially the same as the one filed at Kroger.

Executive Compensation-"say on pay" campaign

This is a continuation of last year's shareholder campaign to prod companies into adopting advisory votes of shareholders to ratify and approve a company’s the executive compensation policies and practices on an annual basis. In 2009 shareholders filed almost 100 “Say on Pay” resolutions. Votes on these resolutions averaged more than 46% in favor, and close to 25 companies had votes over 50%, demonstrating strong shareholder support for this reform. Reform in this area is also part of the financial reform legislation currently working its way through Congress.

Colgate-Palmolive, say on pay - Needmor We have recently received word that due to successful negotiations, this resolution will be withdrawn. There should be a press release soon.

Johnson & Johnson, say on pay - Walden Substantially the same resolution as was filed at Colgate-Palmolive.

Human Rights

Home Depot, diversity report - Trillium Resolution requests that Home Depot prepare a diversity report. This will be the fourth year for this resolution, with votes in the mid-20s. Home Depot has paid out more than $100 million to settle discrimination lawsuits in the last 13 years.

Several of the resolutions listed in other categories also fall under the human rights category, including Aqua America, Google, and Conoco Philips.