Wednesday, May 13, 2009

Rev Thom: Making Waves in the Business World

Not that you would have any reason to do this normally, but if you happened to enter the keywords Belote and Sprint and Nextel into Google in the past 24 hours, you would have received hundreds and hundreds of hits. Most of these hits are repetitions of a story put out by the Associated Press. My connection to this story is that I attended yesterday’s Annual Shareholder meeting for Sprint/Nextel in order to move two shareholder resolutions.

Let me back up a second. A week and a half ago I received a phone call from a Unitarian Universalist involved in socially responsible investing. One of the strategies SRI advocates employ is Shareholder Activism. Basically, this involves organizing a large enough group of the owners of a publicly traded company’s stock to present a resolution calling for a company to change its business practices to make them more socially responsible. When companies hold their annual shareholder meetings in the Kansas City area I am often called to appear and move a motion by proxy. (Ministers are often called because of our experience with public speaking and our ability to think on our feet and speak extemporaneously.)

Yesterday I appeared representing the employees of New York City (!!!) and the roughly $83 billion dollars in the pension plan of NYC teachers, the NYPD, the FDNY, etc. The pension plan owns close to 9 million shares (or about $50 million worth) of Sprint/Nextel stock. I was sorely tempted to show up wearing my Red Sox hat.

I was on the agenda to move a proposal calling on Sprint to make full disclosure of their political giving. At the last moment, I was also called to move by proxy a second proposal which was far less sexy. The second proposal would allow a quorum of ten percent of shareholders to call a special meeting. This is a trend that is spreading quickly around the corporate world with shareholders insisting on their right to call a special meeting. From a purely democratic basis, this seems like not such a bad thing. After all, in the church that I serve calling a special meeting requires a signed petition by 25% of the membership.

Both shareholder resolutions were unanimously opposed by the Sprint/Nextel Board of Directors. They argue that political contributions are a privileged strategic business decision. They also argue that special meetings of shareholders could prove to be expensive and time consuming.

Let me back track again and say that this is not the first time I have engaged in shareholder activism. Two years ago I moved a proposal about the disclosure of political contributions at the Verizon Annual Meeting. As I read the carefully scripted proposal, Verizon’s CEO scowled at me and acted inconvenienced. When I finished with my statement he gave me a curt reply and told me that Verizon’s political contributions were none of anybody’s business. I had information that indicated that some of Verizon’s political giving was going to creationist institutes that tried to get “intelligent design” taught in public schools. I fired back at the CEO, “Can you explain to me how sending money to Creationists who try to undermine the teaching of evolution is part of Verizon’s business plan?” This response irked him.

So, when you show up to take part in Shareholder Activism here is what happens. You show up at a room at a very sterile convention center and there are lots of people wearing dark suits. The convention center has set up an area where coffee and sodas are served. Despite it being 10:00 in the morning, Sprint was serving chocolate chip cookies. The meeting began exactly on time. About 50 people gathered inside a room where about 80% of the seats were empty. Up front, the Board of Directors and the executive management team were seated in the front row. The meeting moves along quickly.

The room was mostly empty because all of the business has been already transacted. It is actually quite stiff and procedural. The Chairman of the Sprint/Nextel Board, James Hance made some perfunctory opening comments and then read the list of items to be voted on. Three items were proposals from the board. Then he called on me and I was given two minutes for each of the shareholder proposals that I moved. My rhetoric counted for little. All of these motions had already been voted on. Mr. Hance was a lot more personable than the Verizon CEO that I told off. He exchanged pleasantries with me and smiled. When I finished moving my proposals the screen behind Mr. Hance flashed up the results of the voting. The three board motions each passed almost unanimously. The proposal to give shareholders the right to call meetings passed with 75% of the vote. The proposal concerning disclosure of political contributions received only 30% of the vote and failed. James Hance smiled at me and said, “Looks like you are 1 for 2 today, Mr. Belote.” I smiled in return, joked about a recount of the final motion, and told him that I would be back.

Next the Sprint CEO, Dan Hesse gave a short speech and then took questions. A local woman asked him a bunch of questions, employing a nasty and accusative tone in her voice. (By the way, I think it is crazy and hilarious that the AP story mentions my name in the third paragraph but doesn't get around to mentioning CEO Dan Hesse and his comments about the state of Sprint/Nextel until the eighth paragraph.)

After the meeting I made small talk with many of the Sprint/Nextel executives. I also held a five minute conversation with James Hance and he was extremely cordial.

The reason I care deeply about the issue of disclosure of political contributions is simple. It is an issue of transparency. Corporate giving to political candidates is a given. However, because the FEC limits giving more than a very small amount to candidates directly, corporations gain their influence by directing much larger contributions to PACs or to other places where the politicians can appreciate a larger sum being given. I would bet that Sprint has given to Sam Brownback and Pat Roberts as well as to Dennis Moore and Kathleen Sebelius. This is business; it is the game you play. However, I believe it is also my right (not only as the proxy representing about $50 million in Sprint stock but also as a member of the general public who may consider investing in Sprint or purchasing their products) to know whether Sprint helps to fund Fred Phelps, or a Creationist institute, or extremist anti-gay or anti-choice groups. At that point, the social responsibility of the company comes into question. It leaves the realm of a “business decision” and becomes a question of “business ethics.” Any sleuth with the time can track down a partial record of corporate giving by digging through candidates’ contribution reports. But such information is inevitably incomplete. The transparency of full disclosure is the only way to measure this ethical dimension of corporate life.

By the way, the chocolate cookies weren’t very good and my choice of a tan suit was a bad fashion decision. Everyone else sported dark suits.