Shareholder Resolutions Yield Results
The shareholder resolutions that Catholic Health Initiatives co-filed last November with other mission-based investors have generated encouraging results. As part of its commitment to socially responsible investing, Catholic Health Initiatives co-filed six resolutions that asked pharmaceutical firms to adopt price restraint policies and two resolutions that asked tobacco companies to ensure that their advertising does not appeal to teenagers.
"Prior to their annual meetings this spring, we had opportunities to dialogue with several of the companies on these issues," said Colleen Scanlon, RN, JD, senior vice president of advocacy for Catholic Health Initiatives. "The meetings with Pfizer were so productive that we actually withdrew the resolution before the company’s annual meeting. We believe that Pfizer is acting in good faith by following an internal policy of price restraint. Pfizer has also been open to discussions about improving access to prescription drugs for the underinsured and uninsured."
Resolutions filed with three other pharmaceutical firms – Bristol-Myers Squibb, Johnson & Johnson and Merck & Co., Inc. – received a sufficient number of votes for the resolutions to be re-filed in the next proxy season. At the annual meeting of Merck & Co in April, Scanlon was able to address the assembled shareholders and company executives. "Catholic Health Initiatives not only sees the impact of the exorbitant cost of drugs on the individuals and communities we serve – we also experience it as a large purchaser of Merck’s products and as an employer that provides prescription drug benefits through Merck-Medco," she said. "As a large health system, Catholic Health Initiatives has more than one way to influence the corporate practices of companies not only as a shareholder, but as a purchaser of products and services."
The resolutions filed with Abbott Laboratories and Eli Lilly and Company did not receive enough votes for re-filing. "However, we are pursuing opportunities to co-file resolutions that will focus attention on issues that advance our mission," said Scanlon. This year, Catholic Health Initiatives will also own enough shares to co-file resolutions with additional pharmaceutical firms.
While the resolutions that Catholic Health Initiatives co-filed with two tobacco companies did not receive enough votes for re-filing, other resolutions filed with those companies by mission-based investors were more successful. "We are looking at other opportunities to pursue our agenda with tobacco companies," said Scanlon. Although ownership of tobacco company stock is restricted by the social screens portion of the Catholic Health Initiatives Social Responsibility Investment Policy, the policy allows the ownership of small amounts of stock for the purpose of shareholder activism.
"We’re pleased with the progress we have made in shareholder activism in partnership with other faith-based organizations, including several of our founding congregations," said Scanlon. "This was the first time that Catholic Health Initiatives filed shareholder resolutions, and we learned a great deal. We’re going to use everything we learned to make sure our voice continues to be heard."