Notes from the Boeing AGM

By Bro. Robert Wotypka, OFM, Cap.

The Province of Saint Joseph of the Capuchin Order, whose Corporate Responsibility agent I am, filed a shareholder resolution in November 2018 asking that Boeing disclose all its political and lobbying spending, as well as its membership in industry and trade associations. We picked up the mantle in the sixth year of this ask, noting that there was a slight but steady upward tick in support of the resolution, reaching 24% in the 2018 annual general shareholders’ meeting. I registered for the event, held 29 April at the Field Museum in Chicago, Boeing’s corporate HQ.

I took the train from Kenosha. I met my company minder, from their capital arm, and had some snacks, connecting with Sisters Barbara Jennings and Marge Clark before taking my seat in an auditorium that likely has seen more class trips than Timothy Leary in his professorial days.

Here are the highlights (as I see it) from my two-minute statement, with thanks to John Keenan of AFSCME for his expert research and prep:

Mark Hanna, a turn-of-the-20th century Senator from Ohio, said,There are two things that are important in politics. The first is money and I can’t remember what the second one is.” We move this resolution not because we are naïve but because we are not. And because we know that companies with a high reputational rank perform better financially than lower-ranked companies. Our company is in a legal and reputational crisis which underscores the need to embrace accountability and to be fully transparent with shareholders, including through disclosure of its lobbying activity. Fellow shareholders, this is not the time to support this resolution; members of the board, this is not the time to implement this resolution. This is past the time to vote in support of and to implement this resolution. We urge shareholders to vote FOR this proposal. Thank you.

I was too nervous to look at the clock, but I prepped and I am pretty sure I made it within the two-minute mark. The resolution received 32.6% of the vote. My sisters in the movement offered congratulations and helped me frame the result – that this means the resolution could be re-introduced next year. Our own Frank Sherman (ED of Seventh Generation), in a post-AGM briefing, explained what I knew only in theory but was now feeling in my bones: that mutual fund managers, who hold immense numbers of shares and thereby voting rights, rarely, almost never, vote against the recommendations of management. And Boeing management urged a NO not against our resolution, against the resolution separating the CEO from the Chairman of the Board of Directors, and against an ask to separate out the impact of share buy-backs from the movement of the stock price, which feeds into and distorts compensation plans. None tracked much more or less than the St. Joseph resolution. But my fellow activists said we ought to celebrate that 8% jump, and so I do, with you. The CEO struck me as well-scripted and immovable – qualities contrary to Gospel movements. There was a serious and challenging question about the processes and values that informed the rollout of the 737 MAX series. And again – a highly scripted and immovable response. There is more to come, to be sure.

One more free muffin, then back to the street where the recently liberated ice cap was still pouring down. I met some protesters on the sidewalk and we talked and commiserated, then a kind soul from the north side dropped me at Union Station, and back to Milwaukee. What do I carry with me? As follows: an AGM is much like a summit, or a pre-Pope Francis synod: the heavy lifting and the grunt work comes before the switching on of the mics and the lights and the summoning of the slides. And thanks to the work of ICCR, Seventh Generation, our co-filers and collaborators, there was much lifting and there was much grunting and the prep work, including filing an exempt solicitation, bore fruit. I stood on the shoulders of gentle giants.

Holistic Approach to Socially Responsible Investing Webinar

In recent months, some SGI members have been revisiting their policies for socially responsible investment. Such periodic reviews can be an opportunity see this ministry in a fresh light. We must evaluate the quality, forms, and priorities of our commitments as to how effectively they serve the needs of our institutions’ mission and, in a preferential way, the needs of those most vulnerable and the care for creation. In such moments, we may find the conviction to respond to the signs of the times and to change the course into which habit and convenience have settled us and our institutions. These are privileged opportunities for each member institution to consider anew how to align investments with our deepest values.

On Friday, April 12, we were joined in our webinar by two leaders within the Interfaith Center on Corporate Responsibility (ICCR): Anita Green of Wespath Investment Management and Susan Smith Makos of Mercy Investment Services. Each shared the approach that their organizations utilize for socially responsible investing.

We are very grateful for the presence of both our guests in this webinar, for their commitment to work on this issues, and their generosity in sharing their wisdom with us.

As always, we welcome your feedback via a confidential evaluation found here. Slides from the webinar are found here.

If your institution is reviewing its policy for socially responsible investment, we are happy to help. Please, contact Frank Sherman or Chris Cox. We also recommend US SIF’s free Roadmap For Money Managers and its Roadmap For Financial Advisors. We also provide a number of resources here on our website.

SGI, Institutional Investors Continue to Press Companies for Disclosure of Lobbying

Among issues of corporate governance, lobbying disclosure remains an urgent topic for shareholder proposals in 2019. Five SGI members are a part of a coalition of at least 70 investors who have filed proposals at 33 companies asking for disclosure reports that include federal and state lobbying payments, payments to trade associations and social welfare groups used for lobbying and payments to any tax-exempt organization that writes and endorses model legislation. That last sentence was detailed precisely because “following the money” is so complicated when it comes to lobbying expenditures. This year’s campaign highlights the theme of corporate political responsibility, with a focus on climate change lobbying.

Corporate lobbying impacts all aspects of the economy. Companies fund lobbying efforts on issues ranging from climate change and drug prices to financial regulation, immigration and workers’ rights. While lobbying can provide decision-makers with valuable insights and data, it can also lead to undue influence, unfair competition, and regulatory capture. In addition, lobbying may channel companies’ funds and influence into highly controversial topics with the potential to cause reputational harm.

In 2018, more than $3.4 billion in total was spent on federal lobbying. Additionally, companies spend more than $1 billion yearly on lobbying at the state level, where disclosure is far less transparent than federal lobbying. Beyond that, trade associations spend in excess of $100 million each year, lobbying indirectly on behalf of companies. For example, the U.S. Chamber of Commerce spent $95 million on federal lobbying in 2018 and has spent over $1.5 billion on lobbying since 1998.

To address potential reputational and financial risk associated with lobbying, investors are encouraging companies to disclose all their lobbying payments as well as board oversight processes. We believe that this risk is particularly acute when a company’s lobbying, done directly or through a third party, contradicts its publicly stated positions and core values. Disclosure allows shareholders to verify whether a company’s lobbying aligns with its expressed values and corporate goals.

“The faith community has been an active investor voice for around a decade pressing companies to expand disclosure on political spending (related to elections) and also lobbying disclosure. This is more important than ever as we look at issues of concern to ICCR members. For example it is a crucial time to hold companies accountable on their lobbying related to climate change and to urge them to lobby only for legislation consistent with the Paris Accord. Or monitor how drug companies lobby on opioids or drug pricing. Lobbying is not a remote governance issue but it intimately linked to a whole range of corporate responsibility issues we are all working on.”


Tim Smith of Walden Asset Management

Companies Receiving Lobbying Disclosure Resolutions for 2019 are:

  • AbbVie (ABBV)
  • Altria Group (MO)
  • American Water Works (AWK)
  • AT&T (T)
  • Bank of America (BAC)
  • BlackRock (BLK)
  • Boeing (BA)
  • CenturyLink (CTL)
  • Chevron (CVX)
  • Comcast (CMCSA)
  • Duke Energy (DUK)
  • Emerson Electric (EMR)
  • Equifax (EFX)
  • Exxon Mobil (XOM)
  • FedEx (FDX)
  • Ford Motor (F)
  • General Motors (GM)
  • Honeywell (HON)
  • IBM (IBM)
  • JPMorgan Chase (JPM)
  • Mallinckrodt (MNK)
  • MasterCard (MA)
  • McKesson (MCK)
  • Morgan Stanley (MS)
  • Motorola Solutions (MSI)
  • Nucor Corporation (NUE)
  • Pfizer (PFE)
  • Tyson Foods (TSN)
  • United Continental Holdings (UAL)
  • United Parcel Service (UPS)
  • Verizon (VZ)
  • Vertex Pharmaceuticals (VRTX)
  • Walt Disney Company (DIS)

Overpaid CEOs

On Thursday, our friends at As You Sow released their fifth annual report on the 100 Most Overpaid CEOs. The launch included a webinar with Rosanna Landis Weaver (the report’s author), Paul Herman (founder and CEO of HIP Investor), and ex-Secretary of Labor Robert Reich.

Not only are these 100 CEOs overpaid concerning the poor performance of their companies, many fund managers, like BlackRock, Vanguard and StateStreet, routinely endorse the executive compensation package of these CEOs at the annual shareholder meeting. The report points to necessary actions by shareholders concerning executive compensation. It really is worth your time to dive in.

Axios.com offered succinct coverage of the webinar and report here.

The report can be found here. The webinar can be found here.

Global companies and global problems

We have come to take for granted the size and sweep of modern multinational corporations. As companies merge to gain scale, it’s difficult to keep track of the corporation behind the brands we buy. Daily, we dress ourselves in clothes bearing labels of “made in” notices for countries that may be difficult to place on a map. We know that our vehicle, as well as our cell phone, was not made in an individual factory but assembled from components and parts made across a dispersed global supply chain. When out of season locally, we may notice that our fruit and vegetables may have come from distant lands. Multinational corporations seamlessly bring together many essential things in our daily lives.

Over the years, these multinational companies have grown to scales that may surprise us. While not an apples to apples comparison, the largest companies have annual revenues that dwarf the gross domestic product (GDP) of many countries. Some may be able to recite the top five global economies:

  1. United States ($20.5 trillion)
  2. China ($13.5 trillion)
  3. Japan ($5 trillion)
  4. Germany ($4 trillion)
  5. United Kingdom ($2.8 trillion)

Readers may be surprised to learn that Walmart, with over $500 billion in annual revenue, would rank #25, displacing Thailand. The fourth largest company, Royal Dutch Shell, displaces the Philippines at #40. The ninth largest company, Exxon Mobil, comes in just behind the Czech Republic, the 46th largest economy. At #11 among companies, Apple had a billion dollars more in revenue than Peru (#51 among countries) had in GDP. Foxconn, the 24th largest company, has greater annual revenue than the GDP of Kuwait (#58 in GDP). In all, 41 of the 100 largest economic entities on the planet would be corporations.

So, what does that mean for us? While policies and laws and regulations from countries are essential, companies play a critical role in addressing environmental and social issues such as climate change, food justice, health, human rights, and water stewardship. At bottom, the decisions that companies make have a tremendous impact on the most vexing global issues. In fact, choices made by companies, in many contexts, have greater impact than individual countries.

Michael Porter, in a 2015 TED Talk, underscored the importance of business in addressing critical problems. Global norms have been shifting. It is no longer acceptable for multi-national companies to simply meet the legal minimums set by local governments. Today, many international standards, including the UN Guiding Principles for Business and Human Rights, underscore the role of companies. Some of our resolutions with companies this year reflect this emerging understanding of the role of companies in addressing human rights.

The work of SGI contributes to the work of so many others– socially-conscious consumers, non-profit organizations, workers in the supply chain, and ethical executives– in seeking a more just and sustainable world.
Given the scale of multinational corporations and global nature of our economy, our mission is more critical than ever.

Decarbonizing Electricity Webinar

SGI has been leading important work on climate change with regional utilities. Today, we hosted our first educational webinar of 2019 where we learned more about how we can advance those conversations. We hosted Dan Bakal of Ceres and Franz Litz, program consultant at the Great Plains Institute. Dan has been a key partner in our dialogues with the utilities. Franz has led innovative efforts to bring together policy makers, regulators, utilities, and NGOs to take action on climate change. In particular, he has led the building of a Road Map to Decarbonization in the Midcontinent.

We are very grateful for the presence of both our guests in this webinar, for their commitment to work on this issues, and their generosity in sharing their wisdom with us.

As always, we welcome your feedback via a confidential evaluation found here. Slides from the webinar are found here.

Investing in firearm safety

Last week, some SGI members (Sr. Ruth Battaglia, C.S.A., Sr. Reg McKillip, O.P., Mark Peters, and Dan Tretow) and I found ourselves in a rather unusual meeting amid law enforcement, retailers, medical professionals, advocates, public officials, media, investors and philanthropists. Hosted by Common Ground, the Industrial Areas Foundation, and Do Not Stand Idly By (DNSIB), the Gun Safety Expo offered a forum for leading developers showcased products that can prevent gun theft and unauthorized or accidental shootings.

SGI and ICCR have been collaborating with Do Not Stand Idly By on gun safety issues. You may recall Sr. Judy Byron’s wins with Sturm Ruger and American Outdoor Brands

DNSIB and ICCR are working on a coordinated strategy to reduce gun violence via a market strategy. As DNSIB puts it, “Our tax dollars buy about 40 percent of the guns in America. The military buys about 25%, and law enforcement 15%. This is enormous market power.” At this time, our cell phones have better safety features than any gun on the market. If law enforcement demand smart guns (e.g., those that require fingerprint recognition or other technologies), suspects could not use their guns against them. As well, it creates a market demand for more secure devices. Homeowners with guns are more likely to have them used against them (or by their kids) than used in self-defense. A new study shows that household gun ownership can pave the way for a high suicide rate among young people. Smart weapons would reduce senseless deaths. Gun manufacturers can take steps, without any change in laws, to make guns safer so that lives may be saved.

SGI members offered the following reactions:

While I have never been around guns, have no desire be introduced to them, and fail to comprehend some people’s need to have ready access to a gun, attending the Firearm Safety Expo nudged me to accept, if not fully embrace, a non-polarized way of addressing the deadly impact of guns. Innovative safety technologies offer some hope in reducing the number of gun-related suicides, deaths, and injuries. We, as socially responsible investors, can join our voices with public officials, law enforcement, and legal services in asking gun manufacturers to develop and use gun safety technologies that make their product child-proof, useless to thieves, and able to save the lives of police and civilians alike.

Sr. Ruth Battaglia, C.S.A.

I guess I was hit with the irony of it all….The more we make guns safe, the more attractive it would be for people to purchase them. We also can use that same logic with gun manufacturers who are not wanting to invest in safety measures…the safer you make the gun, the more people will feel comfortable purchasing a gun.

Sr. Reg McKillip, O.P.

It was very well-planned like all IAF and CG [Common Ground] events, and I was impressed with all the partners they’d brought into the campaign, like the Medical College of WI, and all the elected officials who were present. It is definitely not the whole answer as far as gun control, but it may be the only approach that has a chance in the current political climate. I’m not a gun owner or user, but if I was I think I would have been very interested in some of the products that were either in development or already on the market.

Mark Peters

[The event] was very interesting. I think they had the right players in attendance. The law enforcement presence was especially impressive (WI, IL and OH). The trigger locks make a lot of sense for the existing guns. I think the Biofire presentation and his fingerprint stock was the best idea at the show. I hope his smart gun technology turns into the new standard for weaponry in home safety/security and law enforcement/military application. I hope the gun manufacturers take this into consideration going forward. I agree with the speaker that said incentives will help promote the use of these devices. Government (local/state/federal) use and demand for smart guns by law makers will hopefully cause less accidental shootings and suicides.

Dan Tretow
Milwaukee Mayor Tom Barrett

Among the public officials present were: Tom Barrett (mayor of Milwaukee), Chris Abele (Milwaukee County Executive), John Chisholm (Milwaukee District Attorney), and Barry Weber (Wauwatosa Chief of Police). Vendors included: Biofire, Everwatch, Gun Guardian, Identilock, Ignis Kinetics, SAAR, Safety First Arms, and Vara. These represent companies demonstrating user authenticating guns, personalized locks and gun tracking products. The Oak Creek campus of Milwaukee Area Technical College hosted the event. As home to the Regional Police Training Center, a shooting range was available to allow for live demonstrations.

Some additional coverage of the event:

ICCR provides an excellent, detailed list of coverage of investor action around gun safety here.