Chubb Sustainability Report
WHEREAS: Insurers have an essential role in maintaining healthy economies and societies. However, “The insurance industry underwent considerable turmoil in 2004 as a result of unethical practices uncovered by New York Attorney General Eliot Spitzer and other regulators.” (Chubb 2004 Annual Report) We believe that greater disclosure and management of social, environmental, and governance issues, through sustainability reports, will help strengthen insurers and the economies that rely on them.
Chubb competes internationally and global expectations regarding sustainability reporting are changing rapidly. The European Commission recommends corporate sustainability reporting, and listed companies in Australia, South Africa and France must now provide investors with information on their social and environmental performance.
Chubb does not currently report on social or environmental issues. AIG Environmental has written in its White Paper, Reconciling Environmental Disclosure with Environmental Exposure in an Evolving Regulatory Climate, “Investors realize that poor disclosure or lack of disclosure of environmental liabilities undercuts risk analysis and can threaten shareholder value.”
Michael Diekmann, Chairman of our industry peer, the Allianz Group, has written, “As a financial services provider, we cannot regard sustainability and competitiveness as separate entities. This is the only approach that will allow us to manage change in society and the necessary reforms in a way that is appropriate for the future.”
Insurance Australia Group, a general insurance company with 11,000 employees and a market cap of approximately U.S. $6 billion, has written:
There is no doubt that shareholder returns and our own stability and growth potential will be enhanced by conducting our business in a way that creates value for society on numerous fronts, across environmental, social and economic dimensions…We have identified safety in the workplace and environmental sensitivity in the way in which we go about our business as integral to the life of our companies. Human-induced climate change is now a reality and it is incumbent on insurance companies to do everything in their power to reduce the level of risk by implementing programs for a sustainable environment. ..
RESOLVED: Shareholders request that the Board of Directors issue a sustainability report to shareholders, at reasonable cost, and omitting proprietary information, by September 1, 2006.
Supporting Statement
The report should include Chubb’s definition of sustainability, as well as a company-wide review of company policies and practices related to long-term social and environmental sustainability.
For guidance, we recommend that Chubb use the Global Reporting Initiative’s Sustainability Reporting Guidelines (“The Guidelines”) to prepare the report. The Global Reporting Initiative (www.globalreporting.org) is an international organization with representatives from the business, environmental, human rights and labor communities. The Guidelines provide guidance on report content, including performance in direct economic impacts, environmental, labor practices and decent work conditions, human rights, society, and product responsibility. The Guidelines provide a flexible reporting system that allows the omission of content that is not relevant to company operations. Over 700 companies use or consult the Guidelines for sustainability reporting.
Issue a Sustainabity Report – AIG
Whereas:
As shareholders, we do not believe that American International Group, Inc. (AIG) currently provides comprehensive disclosure on social or environmental issues.
In an April 3, 2005 letter to shareholders, AIG President and CEO Martin Sullivan wrote, “We are committed to improving transparency and corporate governance….”
Our business unit AIG Environmental has written in its white Paper, Reconciling Environmental Disclosure with Environmental Exposure in an Evolving Regulatory Climate, “Investors realize that poor disclosure or lack of disclosure of environmental liabilities undercuts risk analysis and can threaten shareholder value.”
Michael Diekmann, Chairman of our industry peer, the Allianz Group, has written, “As a financial services provider, we cannot regard sustainability and competitiveness as separate entities. This is the only approach that will allow us to manage change in society and the necessary reforms in a way that is appropriate for the future.”
Insurance Australia Group, a general insurance company with 11,000 employees and a market cap of approximately U.S. $6 billion, has written: “There is no doubt that shareholder returns and our own stability and growth potential will be enhanced by conducting our business in a way that creates value for society on numerous fronts, across environmental, social and economic dimensions…We have identified safety in the workplace and environmental sensitivity in the way in which we go about our business as integral to the life of our companies. Human-induced climate change is now a reality and it is incumbent on insurance companies to do everything in their power to reduce the level of risk by implementing programs for a sustainable environment.”
AIG competes internationally and global expectations regarding sustainability reporting are changing rapidly. The European Commission recommends corporate sustainability reporting, and listed companies in Australia, South Africa and France must now provide investors with information on their social and environmental performance.
As shareholders, we believe that greater disclosure and management of social, environmental, and governance issues, through sustainability reports, will help strengthen insurers and the economies that rely on them.
RESOLVED: Shareholders request that the Board of Directors issue a sustainability report to shareholders, at reasonable cost, and omitting proprietary information, by September 1, 2006.
Supporting Statement
The report should include AIG’s definition of sustainability, as well as a company-wide review of company policies and practices related to long-term social and environmental sustainability.
For guidance, we recommend that AIG use the Global Reporting Initiative’s Sustainability Reporting Guidelines (“The Guidelines”) to prepare the report. The Global Reporting Initiative (www.globalreporting.org) is an international organization with representatives from the business, environmental, human rights and labor communities. The Guidelines provide guidance on report content, including performance in direct economic impacts, environmental, labor practices and decent work conditions, human rights, society, and product responsibility. The Guidelines provide a flexible reporting system that allows the omission of content that is not relevant to company operations. Over 700 companies use or consult the Guidelines for sustainability reporting.
Textron Separate Chair and CEO Roles – Textron
RESOLVED: The shareholders of Textron Corporation (the “Company”) request that the Board of Directors establish a policy of separating the roles of Board Chair and Chief Executive Officer (CEO) whenever possible, so that an independent director who has not served as an executive officer of the Company serves as Chair of the Board of Directors.
This proposal shall not apply to the extent that compliance would necessarily breach any contractual obligations in effect at the time of the 2005 shareholder meeting.
SUPPORTING STATEMENT
We believe that having an independent Board Chair – separate from the CEO – reflects principles of sound business practice and corporate governance and is in the best interest of shareholders. The primary purpose of the Board of Directors is to protect shareholders’ interests by providing independent oversight of management and the CEO. The Board gives strategic direction and guidance to our Company. The Board can better fulfill both obligations by separating the roles of Chair and CEO. An independent Chair will enhance investor confidence in our Company and strengthen the integrity of the Board of Directors.
A separation of the Chair and CEO could more effectively address a number of challenges faced by our Company. For example, companies are faced with ethical and legal challenges arising from diverse cultures and political and economic contexts. Today, management must address issues that include human rights, workers’ right to organize and bargain collectively, non-discrimination in the workplace, careful use of the environment and sustainable community development.
A more independent structure can also help the Board to address complex policy issues facing our Company as the international social, cultural and political context within which it operates changes. We believe companies need to formulate policies to reduce risk to reputation in the global marketplace. Our Company should be in a position to assure shareholders that its employees are treated fairly, sustainable environmental standards are in force and human rights standards are upheld wherever our Company does business in the global economy.
Many respected institutions recommend such separation. For example, CalPERS’ Corporate Core Principles and Guidelines state: “the independence of a majority of the Board is not enough” and that “the leadership of the board must embrace independence, and it must ultimately change the way in which directors interact with management.”
In order to ensure that our Board can provide the proper strategic direction for our Company with greater independence and accountability, we urge a vote FOR this resolution.
General Electric Report on Meeting Public Interest Broadcasting Obligations
RESOLVED: That shareholders of General Electric Co. (“GE”) request the Board of Directors prepare a report, at reasonable cost and omitting proprietary information, made available to shareholders by December 1, 2005, detailing GE subsidiary NBC Universal Television, Inc.’s broadcast television stations’ current activities to meet their public interest obligations. The report should include quantitative and qualitative information about public service announcements (PSAs), public affairs programming, news programs, children’s programs and ascertainment.
Supporting Statement
The Federal Communications Act of 1934 requires media companies utilizing the publicly owned electromagnetic spectrum to act as public trustees. Both the letter and spirit of the law require broadcasters to fulfill a public interest obligation in exchange for the use of the publicly owned spectrum.
Failure to meet these public interest obligations can result in a loss of a license to operate. Therefore, we think it is of critical interest to shareholders to understand both how our company’s television stations are currently meeting their public interest obligations and how they plan to do so in the future.
Over the past year a rapidly growing and politically diverse coalition has focused national attention on the role of media companies in our society. The increasingly critical attention being given to media companies is the result, in part, of their failure to either a) meet their public interest obligations or b) communicate effectively to the public the ways in which they are meeting those obligations. Indeed, just this year, petitions were filed with the FCC to deny the licenses of two Washington, D.C. TV stations (Paxson’s WPXW and Fox-owned UPN affiliate WDCA) for failure to uphold their public interest obligations by “failure to serve the educational needs of children.” The petitioners argued that the three television shows that the stations claimed to be “educational” do not meet the FCC definition, and that therefore the stations have failed to meet their quota of children’s educational programming.
As investors we believe this rising criticism, the recent challenges to operate that television broadcasters face, and the likelihood of the emergence of FCC public interest guidelines all give rise to the need for our company to prepare this report outlining how our company is meeting our public interest obligations and how it plans to do so in the future. This action could preempt license loss, foster good will, and enhance corporate reputation.
We urge you to vote in favor of this resolution asking for disclosure of this information.
Pfizer Price Restraint/Access and Affordability
Whereas:
Access to pharmaceutical products is an essential component of adequate health care for all Americans;
In 2002 Pfizer stated: “over the past decade, after accounting for discounts to federal government buyers and Medicaid, Pfizer’s annual price increase in the United States have averaged less than the annual rate of inflation as measured by the Consumer Price Index (CPI).” (Improving Access to Innovative Medicines, Pfizer Forum, 2002);
U.S. spending for prescription drugs grew 11.5 percent to $216.4 billion in 2003, compared with $194 billion in sales the previous year. (IMS Health 2.17.04). Such spending is projected to rise to $445.9 billion by 2012. (The Kaiser Family Foundation, Prescription Drug Trends, March 2003 and Health Affairs, Health Spending Projections for 2002-2012, 7 February 2003);
In The American Journal of Bioethics: Vol 4 No 1 March, 2004, Donald W. Light, and Joel Lexchin, make the case that prices can be lower without jeopardizing basic research for new drugs: More exposure to
global price competition would encourage more innovative research and less of the derivative me-too research. “
A report by Families USA, using data from the Pennsylvania Pharmaceutical Association Contract for the Elderly Program, found that on average, prices for the 50 most-prescribed drugs to the elderly rose nearly three-and-one-half times the rate of inflation from January 2002 to January 2003, compared to just under three times in the previous year. Pfizer products Lipitor, Norvasc, Celebrex, Xalatan, Zoloft and Glucotrol are among the top 50. (Out of Bounds, Families USA, 2003);
In 2002-03, the price increase of Lipitor (20mg) was 4.5 times the CPI; Celebrex 200 mg: 2.6 times the CPI, Norvasc 5 mg: twice the CPI, Xalatan: 3.3 times, the CPI: Zoloft 50 mmg: 2.8 times the CPI, Glucotrol XL 10 mg: 7.1 times the CPI (Out of Bounds);
These price increases are based on the average wholesale price, the price drug marketers suggest wholesalers charge pharmacies. People with no prescription drug coverage do not benefit from discounts negotiated by bulk purchasers of pharmaceuticals;
Proponents observe much doubt that the new Medicare prescription drug benefit will significantly alleviate the cost burden of prescription drugs for seniors.
Due to high cost of prescriptions, several city and state governments already have set up online and phone-based systems to help residents order drugs from Canada. A group of governors has requested permission from the federal government to start importing and warehousing prescription drugs from Canada. (American Medical News, March 15, 2004). 45 states have implemented or made plans to implement prescription drug cost controls to control Medicaid spending growth (Kaiser Commission on Medicaid and the Uninsured, 2003)
RESOLVED:
Shareholders request the Board of Directors report by September 2005 on measures our company is taking to contain the price increases of its most-prescribed drugs to levels equal to or below the annual rate of inflation.
SUPPORTING STATEMENT:
We believe enacting this proposal will help to align our company with its previously stated commitment on prescription drug price increases.
Report on Political Contributions – Pfizer
Use of Shareholder Resources For Political Purposes
Whereas:
The pharmaceutical industry, and Pfizer in particular, spend significant financial and other resources to support political candidates and political entities.
Between January 1, 1991 and December 31, 2002 the Pharmaceutical Research and Manufacturers Association and its members gave $57.9 million in political contributions, including more than $35.5 million in soft money donations to the national political parties and more than $22.4 million in Political Action Committee (PAC) donations to federal candidates. Pfizer led this list, contributing more than $6.7 million. (Follow the Dollar Report, July 1, 2003, Common Cause)
Pfizer donated $1.8 million in 2002 in soft money and Political Action Committee funds, an increase of 600 % from 1992. (Pharmaceutical Manufacturing: Long-Term Contribution Trends, The Center for Responsive Politics, 2003).
Pfizer donated $100,000 in soft money and Political Action Committee funds at a single gala dinner headlined by President George W. Bush in June of 2002. (Lobbies Force a Bitter Pill, Vikki Kratz, Newsday, pg. B4, 4 August 2002).
Whereas:
These political contributions are made with dollars that belong to the shareholders as a group and they are entitled to know how their funds are being spent.
Although there are various disclosure requirements for political contributions they are difficult for shareholders to access and they are not complete. For example, corporate soft money contributions are currently legal in 49 states, but the disclosure standards can vary. Also, while corporations are not allowed to make direct contributions to candidates, they are allowed to fund the administrative support for PACs to which employees make contributions. Corporations can also make unlimited contributions to “Section 527” organizations political committees formed for the purpose of influencing elections, but not supporting or opposing specific candidates. These do not have to be reported.
Whereas:
Our company should be using its resources to win in the marketplace through superior products and services to its customers, not because it has superior access to political leaders. Political power can change, leaving companies relying on this strategy vulnerable. In addition public backlash can harm a company’s reputation and, as a result, its longer term business prospects.
Resolved: Shareholders request that the Board of Directors adopt a policy to report annually to shareholders in a separate report on corporate resources devoted to supporting political entities or candidates on both state and federal levels. We suggest that the requested comprehensive report set forth and quantify, specifically and not in aggregate, company resources devoted to supporting political entities and candidates, to supporting third-party organizations which engage in political activity including section 527 organizations, and related expenditures of money and other resources.
Media Public Interest Obligations – Time Warner
Report on Meeting Public Interest Obligations in the Digital Age
Resolved that shareholders request the Board of Directors prepare a report, at reasonable cost and omitting proprietary information, made available to shareholders by September 30, 2004, detailing Time Warner’s current activities to meet its public interest obligations and any strategies for proportionally increasing those activities based on the increase in channel capacity resulting from the conversion to digital transmission.
Supporting statement
The Federal Communications Act of 1934 requires media companies utilizing the publicly owned electromagnetic spectrum to act as a public trustee. Both the letter and spirit of the law require broadcasters to fulfill a public interest obligation in exchange for the use of the publicly owned spectrum.
Over the past year a rapidly growing and politically diverse coalition has focused national attention on the role of media companies in our society. When the Federal Communications Commission proposed new rules designed to allow greater media consolidation in June of 2003, 2.5 million Americans were stirred to voice their opposition to these proposed changes to Commissioners and Members of Congress. The increasingly critical attention being given to media companies is the result, in part, of their failure to either a) meet their public interest obligations or b) communicate effectively to the public the ways in which they are meeting those obligations. As investors we believe this rising criticism, if unaddressed, could jeopardize broadcasters’ future profitability and viability.
The cornerstone of every broadcaster’s business model is an agreement with the public: a monopoly license to use the people’s spectrum in exchange for public service broadcasting. Telecommunications companies, by contrast, have been forced to pay hundreds of billions of dollars for the use of far less spectrum and have consequently never attained the profitability of broadcast companies. Should the public come to view broadcasters as failing to uphold their public interest obligations, this crucial grant of free use of public spectrum could be called into question.
We believe great attention will be given to the ways that broadcast companies intend to fulfill their public interest obligations as the industry converts from analog to digital transmission. With this conversion, broadcasters’ channel capacity will greatly increase from one analog channel to six or more digital channels. We believe any broadcaster that does not commit to increase their public service activities proportionally to the increase in channel capacity could become the focus of well-organized public and political pressure. Any such action could damage a broadcaster’s reputation and brand and undercut long-term shareholder value. Furthermore, we believe that reticence to embrace increased public service obligations in the digital environment could result in the FCC denying the mandatory carriage of expanded digital channel offerings on cable television systems. Such a denial would badly undercut the potential increase in profitability offered by the transition to digital broadcasting.
Therefore, we think it is of critical interest of shareholders to understand both how our company is currently meeting its public interest obligations, and the company’s strategic vision for meeting these obligations in the digital age. We urge you to vote in favor of this resolution asking for disclosure of this information.
Report on Political Contributions – Merck
Use of Shareholder Resources For Political Purposes
Whereas:
The pharmaceutical industry, and Merck in particular, spend significant financial and other resources to support political candidates and political entities.
Between January 1, 1991 and December 31, 2002 the Pharmaceutical Research and Manufacturers Association and its members gave $57.9 million in political contributions, including more than $35.5 million in soft money donations to the national political parties and more than $22.4 million in Political Action Committee (PAC) donations to federal candidates. (Follow the Dollar Report, July 1, 2003, Common Cause)
In 1999-2000 members of the Citizens for a Better Medicare, which included Merck and several other pharmaceutical companies, contributed $20 million to federal candidates and parties. (Lobbies Force a Bitter Pill, Vikki Kratz, Newsday, pg. B4, 4 August 2002)
In New Jersey alone pharmaceutical companies gave $1.9 million to state elected officials, candidate and political party organizations over the past four years. Merck ranked third on this list of contributors, following Scherling-Plough and Pfizer, but ahead of Johnson & Johnson. (Citizen Action report cited in Drug Makers Gave $1.9 Million to N.J. Politicians in 4 Years, Lewis Krauskopf, The Record (Bergen County, NJ., pg B3, September 24, 2003)
Whereas:
These political contributions are made with dollars that belong to the shareholders as a group and they are entitled to know how their funds are being spent.
Although there are various disclosure requirements for political contributions they are difficult for shareholders to access and they are not complete. For example, corporate soft money contributions are currently legal in 49 states, but the disclosure standards can vary. Also, while corporations are not allowed to make direct contributions to candidates, they are allowed to fund the administrative support for PACs to which employees make contributions. Corporations can also make unlimited contributions to “Section 527” organizations political committees formed for the purpose of influencing elections, but not supporting or opposing specific candidates. These do not have to be reported.
Whereas:
Our company should be using its resources to win in the marketplace through superior products and services to its customers, not because it has superior access to political leaders. Political power can change, leaving companies relying on this strategy vulnerable. In addition public backlash can harm a company’s reputation and, as a result, its longer term business prospects.
Resolved: Shareholders request that the Board of Directors adopt a policy to report annually to shareholders in a separate report on corporate resources devoted to supporting political entities or candidates on both state and federal levels. We suggest that the requested comprehensive report set forth and quantify, specifically and not in aggregate, company resources devoted to supporting political entities and candidates, to supporting third-party organizations which engage in political activity including section 527 organizations, and related expenditures of money and other resources.
Request to Take Steps to Create an Independent Board – EMC
As institutional investors in EMC, we believe it is imperative that our company is governed well. We believe that good corporate governance practices are in the best interests of EMC in this intensely competitive market and will protect the interests of its shareowners.
Indeed, EMC has a positive record on a number of corporate governance issues. However the EMC Board is composed primarily of inside Directors (5 out of 8 Directors listed in the 2000 proxy were employees) and 2 others have close business relationships with EMC. In short, management dominates the Board. Especially in periods of economic difficulty, the widest possible breadth of perspectives on the company’s strategy and operations is imperative. The Board must be a thoughtful, independent voice and not a rubber stamp for management recommendations.
One of the problems of an “insider Board” is that key Board functions and committees such as nominating new Board members, and the Audit and Compensation Committees are heavily influenced by management. It is a conflict of interest for managers to decide their own compensation packages, audit the company’s financial records or develop the slate of Directors.
America’s corporate leaders seem to recognize the value of Board independence. As far back as 1992, a survey of 600 directors of Fortune 1000 companies endorsed by the Business Roundtable found that 93% believed that a majority of the Board should be composed of outside, independent Directors and a majority felt the Nominating Committee should consist entirely of outside Directors. As shareowners we agree. We need Directors who are not current or former executives of EMC or representatives of major suppliers or customers.
Many U.S. corporations have adopted Codes or Governance Principles that include a commitment to a Board with a majority of outside, truly independent Directors. In addition, many institutional investors, including some of the largest pension funds in the United States, actively support independent Boards. The Council of Institutional Investors, a prestigious association of pension funds with portfolios valued over $1 trillion, has supported Board independence in its governance guidelines. In fact, scores of shareholder resolutions asking for policies of Board independence have received majority shareholder votes.
We are well aware that the shareholders elect the Board, but they do so in response to the slate submitted by the Board. Thus we request that the Board take steps to ensure an independent Board by providing shareowners with new independent candidates for whom to vote.
We believe good corporate governance requires that such changes in EMC policy and practice be phased in as soon as possible. Thus, we urge our fellow shareholders to vote for the following resolution:
Resolved: The shareholders request the Board of EMC take the steps necessary to nominate candidates for Director so that, if elected by the shareholders, there would be a majority of independent Directors. When sufficient independent Directors are elected we request that Audit, Compensation and Nominating Committees be composed entirely of independent Directors.
