NEWS CORPORATION SHAREHOLDER RESOLUTION

RESOLVED:  The shareholders request the Board of Directors to adopt as policy, and amend the bylaws as necessary, to require the Chair of the Board of Directors to be an independent member of the Board. 

Supporting Statement:

Events leading to the closure of News Corporation’s News of the World operations in July have raised investor concerns about the cost—in jobs, reputation, market position, and billions of dollars in enterprise value—of inadequate oversight and maintenance of corporate culture within the company.

The allegations of phone hacking, bribery and more have led to an erosion of public confidence, helped to scuttle a critical business acquisition, and threatened the journalistic reputation and viability of publications critical to News Corporation’s success.

The fact that these revelations took years to uncover and address appear to point to a lax ethical culture within News Corporation and a severe lack of effective review and Board oversight. 

By establishing a separate, independent Chair, the Company can begin to rebuild the public confidence and trust that is so critical to a major news organization. It can also help ensure shareholders that the Board of News Corporation takes seriously the events that have undermined the company’s success and value will be remedied and monitored well into the future.

Failure to identify and manage these emerging risks and the clear need to improve the organization’s capabilities in this regard must be addressed immediately and forcefully in order to protect News Corporation shareholders from further erosion of their investment.

To begin to address these concerns, shareholders call for an independent Chair to improve the board’s oversight of management and risk and strengthen accountability to shareowners.

We believe:

1. The role of the Chief Executive Officer (CEO) and management is to run the company.

2. The role of the Board of Directors is to provide independent oversight of management and the CEO.

3. There is a potential conflict of interest for a CEO to be her/his own overseer while managing the business.

Companies are recognizing increasingly that separating the Chair and CEO is a sound corporate governance practice.  Support for shareholder proposals across the S&P 500 Index averaged 29% in 2010. As of 2009, 21% of S&P 500 companies have an independent board chair, compared with 11% in 2001.

Numerous institutional investors recommend separation.  For example, California’s Public Employees’ Retirement System (CalPERS) Global Principles of Accountable Corporate Governance encourage separation, even with a lead director in place. In the U.K. and other international markets, an independent Chair is the prevailing practice.

Board members have also demonstrated a preference for separation. According to a 2010 corporate governance survey of 400 board members by Sullivan & Cromwell LLP, approximately 70% of respondents believe the head of management should not concurrently be the head of the board.

Yale University’s Millstein Center for Corporate Governance and Performance Policy Briefing paper “Chairing the Board (2009),” argued that overseeing the Board is time intensive whereas a separate Chair allows the CEO to manage the company and build effective business strategies.

While separating the positions of Chair and CEO is not a guarantee against future scandals, it does provide another layer of checks and balances and could improve the board’s ability to oversee the activities of the company. By naming an independent chair, News Corporation can create greater independence and objectivity on the board and promote a coherent, long-term response to the challenge of restoring the company’s reputation.

In response to the phone hacking scandal at News Corp that has come to light this month, CBIS has filed a resolution that asks News Corp to separate the Chair and CEO positions and appoint an independent Chairperson. You can read the full text of the resolution here.

CBIS is working with members of the Interfaith Center on Corporate Responsibility to strategize on ways to influence the company to institute corporate governance reforms. The phone hacking scandal has led to a loss of public confidence in the company, stopped a key business acquisition, and caused serious damage to the reputations of prominent News Corp publications. The events that led to the closure of News of the World demonstrate the financial, legal and reputational risk associated with weak corporate governance structures.

By establishing a separate, independent Chair, News Corp can begin to rebuild the public confidence and trust that is so critical to a major news organization. It can also help ensure shareholders that the board takes seriously the events that have undermined the company’s success and value. While separating the positions of Chair and CEO is not a guarantee against future scandals, it does provide another layer of checks and balances and could improve the board’s ability to oversee the activities of the company. By naming an independent chair, News Corp can create greater independence and objectivity on the board and promote a coherent, long-term response to the challenge of restoring the company’s reputation.

Because News Corp’s filing deadline for traditional resolutions was in May, well before the scandal erupted, CBIS filed this resolution as a “floor resolution.” A floor resolution is a rarely-used innovative mechanism that allows shareholders to bring an issue before the Board, management and investors for debate and a vote. It is raised during the shareholder meeting from the floor the day of the company’s annual stockholder meeting.

CBIS will still have the ability to present the resolution and it will be brought to a vote at the company's annual meeting in October 2011 in New York City. Formally presenting our issue in this way will ensure careful scrutiny by the Board and management. We hope to meet with the company soon to discuss our concerns.

The media has also taken note of CBIS’ action. Our resolution was cited in The Wall Street Journal, Bloomberg, the BBC and others.

Today’s shareholder vote at the Smucker’s annual meeting marked an important step towards getting the company to report on climate risks associated with their coffee business and supply chain. The proposal received roughly 30% support (based on preliminary numbers). While 30% might not sound notable, a recent report on the 2011 proxy season puts the vote in perspective: the report found that investor support for shareholder resolutions on environmental and social issues rose to a 20.5% average approval rate (the first time support has ever reached the 20% mark). 30% sure sounds like a lot when measuring against that baseline. Analysts at Trillium Asset Management and Calvert Investment Management also report that first year resolutions generally garner far less support as investors are initially introduced to the proposals.

This vote sends a clear signal to Smucker’s leadership that shareholders are raising legitimate concerns around disclosure of social and environmental risks in their coffee supply chain. Trillium and Calvert will engage with company representatives in the fall pressing them to respond meaningfully to investor concerns about coffee and climate change. While the two investment firms hope to make progress with the company over the course of the next year, they will reserve the right to re-file the resolution in 2012 if necessary.

Oxfam will help keep the pressure on Smucker’s to adequately respond and we’ll keep you updated on opportunities to engage.

August 16th, 2011 | by Heather Coleman

When you think of Smucker’s, jelly and jams typically come to mind, but they are just the tip of the iceberg. The J.M. Smucker Company is actually a leading distributor of Folgers and Dunkin’ Donuts coffee brands (who knew?), with coffee accounting for 40% of the company’s net sales and nearly half of its profits. That’s a whole lot of coffee, considering that the company sells and manufactures many other widely-used household brands like Crisco, Jif, and Pillsbury.

Coffee crops are highly sensitive to weather and temperature fluctuations making it particularly vulnerable to climate change. This past year the cost of coffee skyrocketed following increased demand and poor harvests in high-producing countries like Colombia and Brazil. In 2010 the Securities and Exchange Commission (SEC) adopted new guidance for publicly traded companies, requiring companies to disclose climate change risks, such as physical risks to a company’s assets and supply chains.

Disclosing these risks will create much needed transparency to help investors understand how companies’ supply chains, and the communities that support them, could be impacted by increasingly extreme weather and other likely results of climate change.

This disclosure is essential because community risks are business risks. As climate change increasingly threatens coffee harvests, the impacts are being felt first and worst in the communities where coffee farming is a way of life. But those threats echo all the way up the supply chain. Understanding these risks, and ensuring that companies like Smucker’s are adequately managing the anticipated hazards, is critical to investors and farmers alike.

Reporting in response to the SEC guidance has generally been weak, and Smucker’s is no exception. Very few companies have increased their reporting on material climate risk save for a few sentences added to their annual sustainability reports. This is a bad sign for shareholders who are already feeling the impacts of climate-related risks on their investments.

For example, record high food and commodity prices this year, owing at least in part to increased temperatures and lower crop yields, have led to social unrest in some countries where companies do business and to financial instability in companies unable to pass higher costs onto consumers. Consumers too have felt the pressure, since May 2010, Smucker’s has jacked up prices 34% just to try to stay a step ahead of the commodities market. Smucker’s competitors are responding by making public commitments to sustainability that will help their bottom line.

Already jittery investors are starting to perk up. Two socially responsible investment firms, Trillium Asset Management and Calvert Investment Management, Inc., have filed a shareholder resolution requesting that the Board of Directors provide a report to stockholders describing how the company will manage the social and environmental risks and opportunities connected to the company’s coffee business and supply chain. Shareholders will have a chance to vote for this proposal at tomorrow’s annual meeting at Smucker’s headquarters in Ohio.

Smucker’s has tried to block the resolution and are nervous that disclosing the risks could rattle investors. But if the resolution passes, Smucker’s will be on-the-hook to conduct a detailed risk assessment of climate change on their coffee supply chain and publicly disclose the findings.

Public disclosure of risks is the first step towards ensuring communities in Smucker’s supply chain are adequately protected from impending climate risks such as floods, droughts and extreme weather events. It is critical that small-scale farmers gain access to adequate resources to prepare for and respond to these threats. Not only will such resources will protect communities, they will surely benefit global companies who rely on a stable supply of high-quality coffee beans.

Government policies in support of small farmers are critical to their long term productivity, but this must go hand-in-hand with sound, sustainable corporate practice. This resolution will help multi-national corporations such as Smucker’s to wake up and smell the coffee. As they say, “with a name like Smucker’s, it’s got to be good”. We agree.

Read the original article here.

ORRVILLE, Ohio - The J.M. Smucker Co. perked up coffee-lovers by announcing that after four straight price hikes in little over a year, the company was cutting prices by an average of 6 percent.

The Orrville food company, which is holding its annual shareholders meeting today, said Tuesday's news applies to the prices on a majority of its coffee products sold in the U.S., including top-selling Folgers Coffee, Folgers Gourmet Selections and Dunkin' Donuts packaged coffee sold in supermarkets.

Smucker cut prices in response to declines in the price of raw green coffee futures, which slipped to $2.10 per pound in July, down 9 percent from a 34-year-high of $2.31 per pound in April.

That's still 65 percent higher than the $1.27-per-pound price in April 2010, but represents the third-straight monthly decline after more than a year of steadily climbing prices, according to the International Coffee Organization.

Those rising prices, on top of higher fuel and other production costs, prompted Smucker to increase its own coffee prices four times:

• 4 percent on May 18, 2010;

• 9 percent on Aug. 3, 2010;

• 10 percent on Feb. 8, 2011;

• and 11 percent on May 24.

Smucker's rivals, including Starbucks, Maxwell House, Peet's Coffee & Tea and Green Mountain Coffee have raised their coffee prices over the past year, too, but have not yet responded to Tuesday's announcement.

Dominic Caruso, vice president of Caruso's Coffee Inc., a specialty coffee roaster in Brecksville, said that while prices for some kinds of raw beans have fallen, they remain significantly higher than they were a year ago.

He said that while mass-produced coffee blends like Folgers and Dunkin' Donuts can compensate for more expensive beans by increasing the amount of cheaper robusta beans, coffee houses that specialize in premium beans or single-source coffees have less wiggle room to lower prices.

"On certain coffees, like breakfast blends and doughnut shop blends, we're going to try to pass along that savings to the customer," he said. "But on other coffees, like African coffees or Indonesian Sumatras and Javas, we're stuck" with higher prices.

Caruso doesn't expect many coffee house regulars to switch to brewing at home, however, because coffee is still an affordable indulgence. "The customer who's going to the coffee shop is going there for a lot of reasons besides price," he said.

The price cut news also came a day before Smucker's annual shareholders meeting, where two shareholder groups that advise investors on responsible and sustainable companies are seeking more information about the company's long-term coffee strategy.

Calvert Investment Management Inc. of Bethesda, Md., and Trillium Asset Management LLC of Boston want shareholders to approve their Proposal 5, requiring Smucker to provide a report to shareholders about how the company plans to deal with possible climate changes and threats to family coffee farms within six months of the annual meeting.

Because coffee makes up 40 percent of Smucker's net sales and 48.6 percent of its profit, the groups wrote a letter to shareholders saying that they want to know how the company plans to respond to climate changes like global warming, changes in rainfall patterns, and its "responsibility for its impact on the coffee farming families in its supply chain."

Rebecca Henson, Calvert's sustainability analyst, said: "The proposal is meant to encourage the company to take more meaningful steps" to protect shareholders, because so much of its business depends on coffee. "We just think there's more they can do to manage this risk."

Calvert, a mutual fund which offers advice to more than 400,000 individual and institutional investors, owns 4,269 shares of Smucker stock.

Trillium, the oldest and largest independent adviser devoted exclusively to sustainable and responsible investing, advises several hundred clients who own about 90,000 shares of Smucker.

Both groups say Smucker has provided "woefully inadequate" guidance on these topics and that it "lags significantly behind" its global peers Nestle, Sara Lee and Kraft in providing that information.

Sara Lee, for example, aims to have 20 percent of its coffee volume certified sustainable by 2015, while Nescafe will distribute 220 million disease-resistant coffee plantlets to coffee farmers around the world by 2020.

Smucker declined to answer questions Tuesday about the price cut or Proposal 5, saying that it was in its quiet period prior to Thursday's earnings conference call.

In an Aug. 9 letter to shareholders, however, Co-Chief Executives Tim and Richard Smucker responded that the company had already answered those requests.

They said that "in making the decision and expending time and resources to voluntarily publish a corporate responsibility report, it has taken appropriate action to address shareholder concerns" and that adopting Proposal 5 would be "unnecessary, duplicative and inappropriate."

Read the original article here.