Advisory Committee on Shareholder Responsibility

Advisory Committee on Shareholder Responsibility (ACSR)

For more than twenty years, Williams College has been an activist shareholder in the publicly traded firms held by the College's endowment. The Advisory Committee on Shareholder Responsibility (ACSR) has provided advice to the Finance Committee of the Board of Trustees on matters relating to the non-financial performance of publicly traded equities in the portfolio. Each year, the ACSR advises on votes regarding shareholder resolutions before the annual general meetings of the public companies the College owns directly (about six percent of the portfolio as of October 2007).

Periodically, the ACSR has played a role in providing comment on other matters, including recommending investment vehicles for the Williams Social Choice Fund — an alumni giving option that both helps the College fulfill its mission and contributes to positive social and environmental change. Since 2006, the Committee has been responsible for oversight of the College's commitment to avoid investment in firms doing business in Sudan. This presents particular challenges where, as in most of our portfolio, these shares are held indirectly in commingled vehicles the contents of which their managers do not disclose as a matter of policy. The committee is considering whether further action is justified.

In making recommendations, the ACSR seeks to carry out its responsibilities in a manner consistent with College policies and values. It recognizes the importance of combining strong financial performance with social and environmental commitment.

Membership 2009-10

Faculty
Jim Mahon, Chair
Sara LaLumia
Alumni
Elizabeth St. Clair
Michelle Chandler
Students
Sasha Zheng '11
Anouk Dey '09
Administrators
Sue Hogan, controller
Collette Chilton, chief investment officer

Votes on Shareholder Resolutions 2007-08

Citigroup (for-against-abstain)

Human Rights (7-0-0)
Like the resolution at Morgan Stanley, this one mirrors our own commitment on Sudan. Although the report does not make clear if the Citi holdings in two Sudan-listed companies are direct or on a client's account, the committee supported the resolution.
List lobbyist officers (0-7-0)
The committee considered that enough of this information was available publicly already, and that it included many consultants, so that it was intrusive and unncecessary.
Report on political donations and policy (5-2-0)
An old chestnut among resolutions. The majority saw it as a blow for transparency, though imperfect; the minority saw Citi's actions in 2007 as sufficient to render this mostly moot.
Stop Funding MTR Coal Mining (4-3-0)
The majority considered this a reasonable response to a practice that will soon (and rightly) face regulatory scrutiny and punishment, making the business and hence the loan assets risky. The minority felt strongly that this was too intrusive into Citi's business, and might have been more acceptable if directed at the coal operators themselves.
Report Cost, Effect of Equator Principles (0-7-0)
Although compliance with the principles has a cost for the firm, the resolution was tendentious. Besides, loans not conforming to the principles might well be riskier.

GE (for-against-abstain)

Report charitable contributions (0-7-0)
The committee felt that GE management was in a good position to judge if it was being shaken down by Jesse Jackson and PUSH, making the resolution unnecessary.
Assess costs of climate policy (0-7-0)
The proponents doubt global warming, we don't.

Boeing (for-against-abstain)

Report Foreign Weapons Sales (4-2-1)
The majority thought this was not expensive and an important issue. The minority thought that the resolution had so many omissions that it would not produce information that was unavailable now from other sources.
Endorse Health Care Principles (2-3-2)
The majority felt that the resolution called for actions that would impede the pursuit of other solutions to health care cost rises, and didn't want the union imposing its policy on the firm. The minority saw this as a good way to get the ball rolling on broader health care reform.

IBM (for-against-abstain)

Establish Board committee on human rights (1-4-2)
The majority felt that IBM has been a relatively good actor in this area and therefore, the resolution called for an unneeded committee. The minority thought it was a good way to push management a bit to scrutinize their China suppliers and operations.

Avon (for-against-abstain)

Report Nanomaterial Policy (7-0-0)
The committee saw this as a potentially important health issue, with a great deal of downside risk to Avon's brand. Especially given the firm's public profile associated with women's health, management should be leading on this.

Dover (for-against-abstain)

Issue Sustainability Report (7-0-0)
The committee saw this as a welcome opportunity to bring the firm up to the level of industry leaders on this set of issues.
Report Impact of Climate Change (6-0-1)
The majority felt that, since Dover lags behind its peers on these issues, Carbon Disclosure especially would be a good idea. The minority was not so sure, absent evidence of misbehavior.

Eastman Cm (for-against-abstain)

EEO Policies Gender ID (7-0-0)
Since Williams has a similar policy extnding EEO to gender identity, the committee supports this move at Eastman.

Union Pacific (for-against-abstain)

Report political donations and policy (7-0-0)
A welcome blow for transparency.

CVS (for-against-abstain)

Report political donations and policy (6-1-0)
The same resolution is at several firms this year. While the committee members did not all like the language about identifying who made decisions on political donations, most saw this as a blow for transparency at a firm that has given a great deal to 527 organizations. The dissenter noted that the firm does well on the GA "checklist" and that it has instituted full-Board reviews of such donations, a welcome step.

General Dynamics (for-against-abstain)

Establish ethical criteria for military contracts (0-7-0)
As with tobacco firms, the committee found its position to be somewhat absurd. Ownership of stock in an arms maker is hard to spruce up with ethical resolutions. If we don't like war we should sell the shares.

PepsiCo (for-against-abstain)

Increase container recycling goals (7-0-0)
The committee saw this as good for the environment and for the firm's competitive position, since Coke is doing it.
Set policy on human rights of water use (2-3-2)
The majority found the resolution too vague. The minority saw a possible conflict of interest between sellers of water for profit and UN resolutions on a human right to water; it felt that the company should deflect this suspicion by adopting the principles.
Prepare global warming report (0-7-0)
The proponents are skeptical of global warming and the committee is not.
Prepare report and monitor gene-engineered food (4-3-0)
The majority felt that since damage from GE food would devastate the firm's brand, it would behoove management to get a full reckoning of the prevalence of GE ingredients in its supply chain. The minority saw less of a problem with GE food and thought that current government regulations were sufficient.

Cummins (for-against-abstain)

Adopt and monitor ILO standards (3-2-2)
The majority noted that government regulations are not enforced, even where they exist, so action by shareholders is an appropriate way to highlight a good goal. The minority saw the resolution as too ambitious and is as a firm moving in the right direction.

Comcast (for-against-abstain)

Articulate universal health care principles (3-3-1)
The committee divided evenly on this one: one side saw it as smart political strategy, putting firms on record in favor of a reform which, if it were implemented, would help them in proportion to their level of current generosity in health benefits; the other considered it too vague and the principles too broad.

AIG (for-against-abstain)

Report on political donations and policy (6-1-0)
See CVS. The majority saw it as a welcome blow for transparency, while the minority thought that AIG was doing well on the GA checklist.
Adopt policy on human right to water (1-3-3)
See PepsiCo. The firm is more distant from the question, as an investor in water utilities. The majority considered the resolution too vague and applicable only to a small part of the firm's holdings. The minority saw a similar conflict of interest as noted in PepsiCo.

Pulte Home (for-against-abstain)

Adopt goals and report on greenhouse gas (6-0-1)
The majority saw this as a welcome push to a company that has done little beyond the encouragement of high energy prices. The abstainer did not want to punish a small firm in a difficult market.

Yum Brands (for-against-abstain)

Adopt animal welfare standards on chicken (3-2-2)
The majority had doubts about the resolution and its proponent (PETA), but it considered the firm a laggard. The minority saw this as part of a long grudge match, especially considering that slaughtering is done by suppliers, not Yum. It would also be costly.
Adopt MacBride principles in N.Ireland (6-0-1)
The majority thought that the firm was a laggard on this issue. The abstainer noted that the MacBride principles are outdated and the resolution should have been more specific.
Issue sustainability report (4-3-0)
The minority considered this to be not pressing, and since management is due to report on these issues soon, the resolution might well be moot. The majority did not find management so credible and thought it wise to make our high expectations clear.

JPMorgan Chase (for-against-abstain)

Review/ report human rights policy (6-2-0)
Since the proponents' main concerns were four companies held by the firm doing business with the government of Sudan, the majority saw this as an appropriate application of our own Sudan policy. The minority saw it as too intrusive and, given that the holdings were in client accounts, a fiduciary's forcing the sales of these firms would be illegal.
Report on political contributions and policy (3-5-0)
The majority felt this was too intrusive, especially where it requires disclosure of decision makers and reasons for each contribution, given decent compliance by the firm and the lack of new developments. The minority saw it as a welcome blow for transparency.
Identify and prioritize policy advocacy (0-8-0)
The committee found this extremely intrusive, requiring detailed statements of reasons and lists of priorities, and misleading, given management's record. Plus, we do not doubt global warming as much as the proponents do.
Disclose prior government service (0-8-0)
The committee found this intrusive and poorly conceived.

TJX (for-against-abstain)

Adopt MacBride principles in N. Ireland (0-7-1)
The majority considered that the resolution was moot, given the near even balance between Protestant and Catholic employees in the TJX stores in Northern Ireland, and the substantial inclusion of the principles into law and practice in the country since the peace agreements.

Wal-mart (for-against-abstain)

Establish board committee on human rights (7-1-0)
The majority saw this as an appropriate way to respond to the variety of allegations, lawsuits, and bad publicity the firm has received in this area. The minority saw it as too detailed and prescriptive, and perhaps unlikely to be effective without management buy-in.
Report on political donations and policy (7-1-0)
The majority considered Wal-mart as an appropriate target for this standard resolution. The minority saw it as overkill, given the variety of responses made by the company in recent years.
Adopt sexual orientation anti-bias policy (8-0-0)
The committee saw the resolution as asking the firm to do only what Williams does.
Review impact of poor labor practices (7-1-0)
The majority saw this as appropriate for a firm that has faced bad publicity, with reason, for labor practices at home and abroad. This was the case despite some misgivings about the wording of the resolution. The minority found it too vague.

BE Aerospace (for-against-abstain)

Adopt MacBride principles (4-3-1)
The majority felt that, although BE has not had complaints and shows no evidence of bad faith, the firm could be more forthcoming and transparent on its employment practices, and following MacBride standards is one good way to do this. The minority felt that the lack of noticeable problems and the age of the Principles made the resolution moot.

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Membership 2007-08

Faculty
Jim Mahon, chair
Cathy Johnson
Alumni
Elizabeth St. Clair
Michelle Chandler
Students
Jia Cui '10
Rachel Hudson '10
Administrators
Sue Hogan, controller
Collette Chilton, chief investment officer

Votes on Shareholder Resolutions 2006-07

April 9, 2007 (for-against-abstain)

Citigroup Inc.

Review/report on charitable giving/policy. Natl. Legal and Policy Ct. (0-7-0)
Disclose prior government service. Davis, E. (1-6-0)
Report on political donations and policy ## Teamsters (4-3-0) resolution felt by some to be an imperfect tool to pursue a resonable objective.

Eli Lilly and Co.

Review overseas animal testing, PETA (5-1-1)
Review animal welfare standards, PETA, Trillium (2-5-0)

Pfizer Inc.

Review overseas animal testing, PETA (5-1-1)
Review animal welfare standards # PETA (1-6-0)

International Business Machines Corp.

Report on risk to image of globalization strategy, Saville, Michael L. (2-4-1) committee divided on whether proponent (labor union) would engage with firm if resolution were adopted.

General Electric Co.

Review/report on charitable giving/policy, Natl. Legal and Policy Ct. (0-6-0)
Develop military contracting criteria # Srs. Charity/BVM (3-3-0) committee divided on underlying policy question of whether College should invest in firms engaged in military business; agreed to discuss with respect to later Boeing resolution.
Report on climate change science ## Action Fund Mgt. (0-6-0)

Dover Corporation

Issue sustainability report, Walden (6-0-0)

April 23, 2007 (for-against-abstain)

CVS/Caremark Corp

Issue sustainability report, F&C (6-0-0)

The Boeing Co.

Adopt comprehensive human rights policy, Capuchins (7-0-0)
Review/report on charitable giving/policy, Natl. Legal and Policy Ct (8-0-0)
Report on political donations and policy, Newground (6-1-1)
Report on foreign military sales, Srs. Charity/BVM (6-1-0)

Union Pacific Corp.

Report on political donations and policy, NYC funds (8-0-0)

May 2, 2007 (for-against-abstain)

Berkshire Hathaway

Cease investments in Sudan via China (6-0-0)

HCC

EEO policy (6-0-0)

May 10, 2007 (for-against-abstain)

Boston Properties Inc.

Report on energy efficiency plans, New England Friends (6-0-0)

JPMorgan Chase & Co.

Report on political donations and policy, AFL-CIO (6-0-0)
Review actions on slavery history ## Natl. Legal and Policy Ct (0-7-0)

Home Depot, Inc.

Affirm political nonpartisanship ## Davis, E. (4-3-0)
Report on EEO, Walden, Camilla Madden Trust, GBPUMC (8-0-0)

Yum Brands, Inc.

Review environmental impact of fishing practices, Srs. Charity/BVM (4-2-1)
Report on progress toward humane slaughter method, PETA (6-1-0)
Urge Macbride on franchisee, NYCERS (7-0-1)

McDonald's Corp.

Label gene-engineered or cloned food, Camilla Madden Trust (5-3-0)

Mattel, Inc.

Report on implementation of global principles, Hessler-Grisel, M. (6-2-0)

May 17, 2007 (for-against-abstain)

McDonald's Corp.

Implement ILO standards ## Adrian Dominican Srs. (5-1-0)

Wal-Mart Stores, Inc.

Review impact of poor labor practices, NYC funds (5-1-0)
Review/report on charitable giving/policy ## Natl. Legal and Policy Ct (0-6-0)
Report on political donations and policy, NYC funds (6-0-0)

May 23, 2007 (for-against-abstain)

Viacom Inc.

Sell tobacco-supporting film unit # As You Sow Fdn. (1-5-0)

Wal-Mart Stores, Inc.

Report on stock options by race/sex, Northstar (6-0-0)
Report plans on healthcare challenges,Basilian Fathers/Toronto (3-3-0) Against doubted resolution's effectiveness, though agreed that WMT could improve. For thought pressure should be applied but did not expect changes if the resolution were adopted.
Review tax, tort & regulatory reform, not available (0-5-1)

June 18, 2007 (for-against-abstain)

Lear Corp.

Implement ILO labor stds, NYC Empl Retirement Sys (6-0-0)