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Shareholders make sure voices are heard
By MATT KEMPNER
The Atlanta Journal-Constitution
It's that magical season for gadflies, protesters, earnest shareholders
and retirees who like free cookies: Showtime in corporate America.
At annual shareholder meetings, almost anything can happen.
They are the anachronistic corporate cousin of town hall
meetings, where directors are elected and proposals are vetted. Every
investor can speak, whether their portfolios are worth $20 million or
$20.
Picture a Fortune 500 executive being scolded by clergymen and weekend
investors. See shareholders in costumes. Witness an investor asking
a tobacco executive to observe a moment of silence for her father who
died of cancer. Guess how many times one activist can hog a microphone.
To appreciate the annual rite, The Atlanta Journal-Constitution took
a crash cruise along the circuit. Six cities, seven meetings later,
we came away with snippets of understanding, starting with one of the
most common sights at these gatherings: the backs of the heads of corporate
directors, who almost always get front-row seats and rarely turn to
look at their stockholders.
Kraft
Lisa Archer, wearing a conservative business suit and an inflated cheese
hat, has carefully prepared for this day.
She wrote letters to stock analysts about genetically modified foods.
And she tried to round up college students for a picket line —
not an easy task for a Tuesday morning during finals week.
Only a handful of women, one of them costumed like an ear of corn, picketed
with the 27-year-old health campaign coordinator for Friends of the
Earth.
Protests work, Archer says. In its federal filings about potential risks
to the company, Kraft now lists consumer concerns about genetically
modified foods.
"That's the beauty of shareholder meetings," says Archer,
who owns just one share of Kraft stock, enough to get in the annual
meeting. "Kraft has the power to make a huge change in the way
our food is produced."
But Kraft is careful to keep out non-shareholders. Numerous checkpoints
are manned by security personnel in suits and earpieces a la the U.S.
Secret Service. Shareholders enter through metal detectors and are warned
not to bring in cameras, recording devices, cellphones, pagers or pets.
Once the 100 or so shareholders in attendance are settled, Kraft Chairman
Louis Camilleri reads from a TelePrompTer about the state of the company.
Then the investors have their chance, gathering around microphones set
up in the audience.
A gray-haired man complains about Kraft's decision to donate to charity
rather than giving stockholders at the meeting gift bags stuffed with
the company's products. Another stockholder asks about having more independent
directors on the company's board.
Camilleri assures, "It is something we are looking at very, very
seriously."
Merck
Tony Sheha is about to walk into another shareholder meeting, where,
he is convinced, small investors like himself make little difference.
"There are so many shares, you're minuscule," says the 72-year-old,
who lives nearby. But, he says, "it's a day out."
It takes awhile for shareholders to sit down. Instead of flipping through
proxies, many are shuffling through the food line, scooping up cheese
squares and mini cream puffs.
Once they're fed, they get an update on the company. Dr. Peter Kim,
president of Merck's research laboratories, stands at the lectern and
plods through his presentation about the company's drug research. "All
of us," he says, "are very excited to be part of this remarkable
scientific revolution."
At least two men in the audience appear to be asleep. But they soon
rouse.
A man in a clerical collar is accusing Chairman Raymond Gilmartin of
"dramatic ethics violations." Merck, he contends, profited
from a rubella vaccine developed from cell lines from abortions performed
in the 1960s.
The reverend and others press Gilmartin, who deftly avoids the "A"
word. But before the end of the meeting, Merck's chairman concedes that
the cell lines apparently were from abortions.
Hershey Foods
This has to be a corporate chairman's sweet dream: Shareholders have
only nice things to say.
Everybody looks happy as they pop free Hershey's Kisses, trying out
the new strawberry and double fudge flavors before the candies show
up on store shelves. Workers in candy character outfits waddle the halls.
Before the meeting, Chairman and CEO Richard ("Rick," to shareholders)
Lenny is meeting his public, shaking hands.
His staff put together a long list of questions he might get from shareholders
and suggested answers. But it doesn't look like he needs it.
One of the first shareholders to speak during the meeting just wants
to thank Lenny for the job he has done.
Another asks why he can't find Fifth Avenue bars in his local store.
Staff will check it out, Lenny says.
A man asks the chairman why a major California pension plan raised concerns
about the company. Lenny says it had to do with the links between Hershey
and its outside auditor, but he assures that everything is OK.
"I think you are doing a great job," the man tells the chairman.
"I don't know what they were upset about."
Altria Group
It's tough to get such a lovefest from shareholders when one of your
biggest products is tobacco.
More than 100 protesters are stationed out front and more are inside
ready to confront Altria, the parent of cigarette maker Philip Morris
and owner of more than 84 percent of Kraft stock.
"We came here to study the way they fight against tobacco use in
the U.S.," says Arthit Khwankhom, an anti-smoking activist from
Bangkok, Thailand.
Nearby, Tyson Suzuki, a 19-year-old from Hawaii, is holding a bullhorn
and leading chants. "Tobacco is whack. Take it back."
Security personnel are everywhere on the driveway leading to the meeting.
A smoking tent is set up for shareholders those who prefer to watch
the meeting on closed-circuit TV while they puff.
Altria Chairman Louis Camilleri, the same guy who headed the Kraft meeting
earlier in the week, gives the highlights. Kraft hasn't done as well
as expected. But there is good news on the tobacco front. Half as many
new suits were filed against the company in 2003, compared with the
year before.
The shareholder onslaught begins. There are nurses, doctors, nuns, cancer
researchers and health activists from other nations. They want the company
to apologize for past transgressions, do more to warn pregnant women
of smoking's dangers, put pictorial warnings on packages in nations
where few people can read.
Sharon Pratt Brown, identifying herself as a nurse and shareholder from
Arizona, stands at a microphone and asks for a moment of silence for
her father, a smoker who had died of cancer. People in the room, including
two company executives on stage with Camilleri, bow their heads. Camilleri
scans the room, waiting out the brief silence.
"Well, thank you. And I'm sorry about your father," the chairman
tells her. "We are doing everything we can to come up with a product
that will have less risk."
The complaints seem to make little difference to the success of shareholder
proposals. All die with more than 90 percent of votes against them.
Boeing
The Rev. Michael Crosby is familiar with losing.
The friar from Wisconsin backed a proposal defeated at the Altria meeting
in New Jersey a few days earlier. Now he's in Chicago, about to lose
again.
Since 1997, he and fellow activists have been drafting proposals about
companies' dealings with China, a nation often under fire for its human
rights record. He's expecting to get no more than 6 percent of the vote
today.
"We are coming from a Judeo-Christian perspective," says Crosby,
who has taken a vow of poverty and doesn't own stock, but helps an association
representing faith-based institutional investors. "You cannot be
exploiting your work force. You cannot be degrading human beings or
the planet."
There is a limit on how long each shareholder can speak during each
visit to the microphone. But there seems to be no limit on how many
times they speak. In fact, two men manage to capture the microphones
nearly a dozen times each.
"I'm the No. 1 shareholder activist in Chicago," says Martin
Glotzer during one of the few times he isn't at a microphone or heading
to one.
It's not tough coming up with things to say, says the 76-year-old who
has made the rounds of annual meetings for more than 30 years. "The
only preparation I do is clean my ears. If you are a good listener,
you can always pick up something that needs further explanation."
Motorola Inc.
Unlike many corporate chiefs, Motorola Chairman Edward Zander looks
at ease on stage.
He gets out from behind the lectern, makes the audience laugh and puts
up on a giant screen a list titled "Why I'm Excited to be With
Motorola."
But Martin Glotzer — "the No. 1 shareholder activist in Chicago"
— is back.
One newspaper reporter warns another: Don't give Glotzer your business
card. He'll never stop calling.
Glotzer gets to the microphone with remarkable speed and frequency for
comments that range from welcoming Zander to Chicago to asking to give
a retiring director non-voting emeritus status.
Zander confides later that annual meetings aren't like other gatherings
in the corporate world.
"It's a different constituency," he says. "You do hear
opinions and thoughts that you don't usually hear."
Ryan's Restaurant
Group
Here's a side of directors not seen often at annual meetings: their
faces. This board is facing the audience.
Not that it is much of an audience: Eight rank-and-file shareholders
— exactly one more than there are directors on Ryan's board —
plus assorted bankers, lawyers, vendors and Ryan's staffers.
Chairman Charles D. Way displays a chart of additions that have solidified
Ryan's as an eatfest: 1985 — Mega Bar, 1986 — Ice Cream
Bar, 1991— Bakery Bar, 1998 — Carving Bar, 1999 —
Steak Night.
Way later reminisces about the early 1980s — before a stock market
crash and the rise of institutional holders — when Ryan's stock
price soared and hundreds of local investors packed the company's annual
gatherings.
"It's kind of blah now, I hate to say."
Staying in touch
The pilgrimage to shareholder meetings is over. Days have passed since
the last one.
Then the phone rings.
It's Martin Glotzer, Chicago's No. 1 shareholder activist.
He's busy, busy. So many annual meetings.
He's been hoping that at one of them he'll meet somebody who will launch
some kind of business opportunity with him. And why not?
You can always find something at annual meetings.
We'll talk again, he says.
IF IT'S TUESDAY, THIS MUST BE MERCK
An eight-day, six-city round of annual meetings offers a glimpse of
a corporate ritual:
Tuesday, 9 a.m., Kraft at the company's research and development
center in East Hanover, NJ
Same day, 2 p.m., Merck in the theater at Raritan Valley
Community College in North Branch, N.J.
Wednesday, 2 p.m., Hershey Foods at the Hershey Lodge
& Convention Center in Hershey, Pa.
Thursday, 9 a.m., Altria Group back at Kraft Foods' research
and development campus in East Hanover, N.J.
Following Monday, 10 a.m., Boeing Co. at the Renaissance
Chicago Hotel, Chicago
Same day, 5 p.m., Motorola Inc. at the Rosemont Theatrein
Rosemont, Ill.
Wednesday
again, 11 a.m., Ryan's Restaurant Group at the Greenville/Spartanburg
Airport Marriott in Greenville, S.C.
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