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Shareholders try to set agenda at annual meetings

South Africa was hot. Northern Ireland was tough. Tobacco continued to smolder. And the Valdez Principles made lots of waves in their maiden voyage but ran into a couple of unexpected corporate reefs. Another spring, another annual meeting season and another opportunity for advocates of social causes to tweak the consciences of the nation's corporations.

They did just that.

The 1991 season was the busiest ever for social policy shareholder proposals, according to the Investor Responsibility Research Center of Washington, which studied the votes on 200 stockholder resolutions covering 21 subjects.

"The most striking feature of the results is the hardiness of the South Africa resolutions," said Carolyn Mathiasen, director of social issues for the IRRC.

Despite Nelson Mandela's release from prison and signs of progress against apartheid, South Africa resolutions continued to be the strongest vote-getters, Mathiasen said.

Proposals asking management to cut ties to South Africa won an average of 13 percent of the votes at the annual meetings of 81 banks and industrial companies, setting a new high.

Shareholders seeking corporate support for the MacBride Principles, which ask companies to observe fair employment practices in strife-filled Northern Ireland, won almost 11 percent of the votes at 18 companies.

And the Valdez Principles, a tough code of environmental conduct for corporations, got an average vote of 8 percent at 24 companies that were asked to sign. The principles were drawn up by the Ceres Coalition, a group of investors and environmentalists. At seven other companies, where shareholders asked for a report on environmental practices, they garnered 10.1 percent of the vote.

Shareholder resolutions aimed at seven tobacco companies dealing with advertising and marketing got 4.7 percent of the vote. The result was somewhat better than a year ago.

Although the percentages garnered by the social issues may sound low, shareholder activism is more than just a numbers game, said Timothy H. Smith, executive director of the Interfaith Center on Corporate Responsibility of New York. Smith's group represents 250 Protestant and Catholic groups that have billions of dollars invested in U.S. companies.

"I think 8 percent is an exceptionally good vote for the first year," Smith said of the Valdez vote. Many of the resolutions on the Valdez Principles and other subjects were sponsored by individual church groups.

"The impact of these resolutions is not just the votes they get but the ripple effect _ the changes in policy that are made by the companies."

Smith observed that a sizable number of Valdez resolutions were withdrawn before they reached a vote _ 17 of 48 _ after the companies listened to shareholder concerns and offered to provide reports on the companies' environmental problems.

At the least, Smith said, shareholder resolutions create pressures that set off debates inside and outside companies about environmental policies. The debates, in turn, prompt companies, especially those concerned about their public images, to pay more attention to environmental practices.

The shareholder season, however, remains rooted in confrontation.

Companies that do not want to include resolutions from shareholder activists on their ballots can and often do appeal to the Securities and Exchange Commission.

When they do, shareholder activists fight back, putting the SEC in the middle.

William E. Morley, SEC associate director, said the agency's staff tries to balance the rights of shareholders to raise issues at annual meetings with the rights of companies not to be harassed in their daily business activities.

Although there are many close decisions, he said, shareholder resolutions that involve corporate policy-making are likely to get on the ballot while those that involve only ordinary business matters probably will not.

Typically, he said, the SEC rules on 300 to 400 such disputes each year. But many decisions involve organizational issues.

Two corporations, Chevron Corp. and Texaco Inc., were able to avoid putting the Valdez Principles on their ballots this year by unusual maneuvers, both of which gained SEC approval.

Chevron wrote its own environmental policy, which it submitted to shareholders, and Texaco hired Arthur D. Little, a consulting firm, to audit its environmental practices. The audit was not made public.

Mathiasen of the Investor Responsibility Research Center said she took no position on the maneuvers. But she said while the Chevron and Texaco's actions came too late this year to affect other corporations, they could affect how companies behave next year.