Pressuring Companies to be More Responsible

Responsible Wealth Action News
April 2006

What do Staples and Hain Celestial have in common? Both have bowed to pressure from shareholder resolutions by NorthStar Asset Management.

Staples has agreed to adopt an open and transparent communications policy for the company's political donations, and Hain Celestial has agreed to document and disclose the exact pay gap between its top executives and lowest-paid workers, and evaluate whether that gap should be narrowed.

These two recent successes build on years of effort and prior successes with companies like Cardinal Health, Caterpillar, Emerson Electric, FedEx and MBNA. Founded in 1990, NorthStar first started filing shareholder resolutions in 1998, in partnership with Responsible Wealth. Since then, things have really taken off.

"Wealth disparity is one of the issues many of our clients struggle with," says Margaret Covert, NorthStar's shareholder activism coordinator.

As a result, many of the shareholder resolutions focus on executive compensation. For example, a recent target of NorthStar's is ExxonMobil, whose CEO received more than $80 million in compensation in 2004.

"I don't care how much money ExxonMobil is making. That's just an absurd rate of pay," said Julie Goodridge, Northstar's president and founder, in an interview with NPR.

In addition to executive compensation reviews, NorthStar has pushed companies on predatory lending, competitive board elections, environmental concerns, and adding sexual orientation to their non-discrimination policies.

"There are so many issues we could be tackling. Take another example," says Goodridge, "Caterpillar has manufacturing plants in Africa, and yet is not involved in the communities helping those living with HIV/AIDS.

"We want companies to understand that not only is an unhealthy workforce neither productive nor profitable, it is unethical for a company to stand by while its workforce slowly dwindles. If the people running the companies are unwilling to take responsibility for the health of their workers, the shareholders can persuade them to do so," Goodridge says.

And according to Covert, if nothing else, responsible corporate behavior protects a company from litigation.

"Let's face it, people don't tend to want to sue the good guys. People don't tend to fight against companies that are improving the world."

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