586 JOURNAL OF EMERGENCY NURSING 28:6 December 2002

P O L I C Y P E R S P E C T I V E S

Shareholder Activism and Health Policies

We tend to think about influencing health poli-cies primarily through the public sector—thatis, through working to make changes in gov-

ernmental laws or regulations that affect health and healthcare services. However, health policies in various areas andnursing practice itself are also affected by the activities ofpublicly traded corporate interests that, increasingly, exertsignificant influence over our lives. It can seem overwhelm-ing to try to think about how such large entities as corpo-rations might be influenced to do things differently, or howto raise health concerns to the level of public discourse.However, because nurses are highly regarded by the publicand because many nurses now own small amounts of stockor mutual funds, they may actually be in a good position tohelp advocate for changes in corporate behavior that canaffect the health of communities and countries. Shareholderactivism provides access to corporations that influence manyaspects of our daily lives, from the food we eat to the healthcare we receive. In light of the series of recent disclosures offinancial irregularities by large corporations, citizens andshareholders have even more incentive to become involvedin corporate governance and accountability.

An article published in the British Medical Journal de-scribed how sustained shareholder activism influenced thebehavior of tobacco companies and their corporate allies.For some 20 years, a coalition of religious groups in theUnited States, the Interfaith Center on Corporate Respon-sibility (ICCR), has focused on using shareholder resolu-tions to challenge the tobacco industry, with some success.For example, the group has filed resolutions seeking infor-mation from tobacco companies about markets in develop-ing countries, about policies related to the World Health

Author: Ruth E. Malone, RN, PhD, San Francisco, Calif

Ruth E. Malone is Acting Associate Professor of Nursing and HealthPolicy, Institute for Health Policy Studies and Department of Social andBehavioral Sciences, University of California, San Francisco.

For reprints, write: Ruth E. Malone, RN, PhD, Acting AssociateProfessor of Nursing and Health Policy, Institute for Health PolicyStudies, Box 0936, Laurel Heights Campus, University of California,San Francisco, San Francisco, CA 94143; E-mail:rmalone@itsa.ucsf.edu.

J Emerg Nurs 2002;28:586-8.

Copyright © 2002 by the Emergency Nurses Association.

0099-1767/2002 $35.00 + 0 18/9/128203doi:10.1067/men.2002.128203

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Organization’s recommendation to ban tobacco promo-tions, and about advertising to minors.

Because nurses are highly regarded bythe public and because many nursesnow own small amounts of stock ormutual funds, they may actually be ina good position to help advocate forchanges in corporate behavior that canaffect the health of communities andcountries.

The ICCR persuaded the Philip Morris company tosupport state legislation restricting the location of self-ser-vice tobacco products displays to make it more difficult forminors to obtain tobacco products. However, much of theirsuccess has come from shareholder resolutions aimed atchanging the behavior of nontobacco companies affiliatedwith the tobacco industry. For example, the ICCR, usingshareholder action strategies, persuaded Pfizer to stop sup-plying the tobacco industry with products used in growingand manufacturing tobacco and successfully urged Sara Leeto sell a tobacco business unit.1 More recently, in responseto ICCR shareholder actions, the Wendy’s hamburger chainwent smoke free.2 Shareholder activism has also been partof persuading Home Depot to sell only sustainably har-vested wood products and has called attention to safetyconcerns about genetically modified foods.3 In 2001, ashareholder resolution urging Microsoft Corporation toconsider human rights issues in its trade with China re-ceived almost 9% of the shareholder votes cast. Similar ef-forts are under way with other large corporations. All theseefforts have implications for health.

Filing a shareholder resolution

Filing a shareholder resolution means having an opportu-nity to bring concerns before all the shareholders and com-pany executives at the annual meetings. Having the right todo so requires holding stock in the company worth at least$2000 at market rates and holding the shares for at least 1 year prior to filing the resolution. Resolutions can be no

longer than 500 words. Shareholder resolutions are subjectto the rules of the US Securities and Exchange Commission(SEC), which regulates most publicly traded companies.The SEC rules for filing a shareholder proposal can befound online at http://www.sec.gov/rules/final/34-40018.htmand include detailed instructions. Scroll down through thediscussion of recent modifications to the rules to find aneasy question and answer format that explains the processin “plain English.”

The initial step, once one is a shareholder qualifiedunder the rules to do so, is to send a letter with the proposedresolution to the company. The company can then try to ar-rive at a resolution through dialogue, include the resolutionin its proxy materials for the annual meeting, or try to ex-clude the resolution by challenging it before the SEC, whichis a common response. Certain types of resolutions may beexcluded. For example, if a resolution is deemed to be a “per-sonal grievance” with the company or if it is designed to re-sult in personal benefit to the shareholder, it would be ex-cludable. Also excludable are resolutions interpreted by theSEC as constituting an attempt to interfere with the “ordi-nary business” of the company—that is, hiring and person-nel matters, decisions regarding retention of suppliers, anddaily business operations. However, in recent years, someresolutions related to supply sources have been allowed toproceed—for example, addressing “sweatshop” conditionsfor workers in overseas company supplier factories.

Sustained shareholder activism influ-enced the behavior of tobacco compa-nies and their corporate allies.

If the company decides to challenge the resolution be-fore the SEC, the shareholder who filed it must submit a re-sponse to the company’s challenge. However, the SEC’s em-phasis on “plain English” and its charge to protect the rightsof shareholders and the public mean that one should nothave to be or hire an attorney to participate in the process.

How likely is it that a shareholder resolution would pass?

Shareholder proposals typically do not achieve a majority ofvotes and may not be binding even if they did; however,their effectiveness lies in stimulating dialogue. A proposal

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that garners media attention and achieves even a small per-centage of the vote can put pressure on companies to con-sider undertaking reforms. Good public relations are eco-nomically valuable to companies, and therefore the threatof negative public relations that might result from simplyignoring shareholder activists is sometimes enough to in-spire a company to act.

Make a habit of promptly reviewingyour proxy statement containing theresolutions to be voted on at the com-pany’s annual meeting to see whetherany shareholder resolutions have madeit on the ballot, and if so, whether yousupport them.

Role of small stockholders

Many nurses do not own sufficient dollar values of a stockto qualify to file a shareholder resolution. However, if youown individually any amount of stock in a company, youshould make a habit of promptly reviewing your proxystatement containing the resolutions to be voted on at thecompany’s annual meeting to see whether any shareholderresolutions have made it on the ballot, and if so, whetheryou support them. Every share/vote counts, and capturingeven small numbers of shareholder votes can increase thelikelihood of institutional change. In addition, it is possibleto delegate your proxy vote to activists who will attend thecompany annual meeting and speak out about the issues.Nurses who own mutual funds as part of retirement plansor other investments can also seek out “socially responsible”funds, which apply various screens (human rights record,employee benefits, environmental record) in choosingwhether to invest in a company.

Effects of shareholder activism

Nurses, as health advocates, may be effective spokespersonsfor shareholder efforts that may result in improving thehealth of millions of individuals through changes in corpo-rate behavior.

Resources for further information

• http://www.foe.org/international/shareholder/index.html

• http://www.irrc.org/• http://www.scn.org/earth/wum/6Website.htm

REFERENCES1. Crosby M. Religious challenge by shareholder actions: changing

the behavior of tobacco companies and their allies. Br Med J2000;321:375-7.

2. Staff & wire reports. Wendy’s agrees to ban smoking. ColumbusDispatch 2000 Dec 22;Sect 1B.

3. Schwartz E. Activists now have corporate attention. ChicagoSun-Times 2000 Feb 13; Sect 40.

4. Taylor N. Microsoft fends off challenge on China staff rights.South China Morning Post 2001 Nov 9;Sect 8.

Submissions to this column are welcomed and encouraged. Submis-sions may be sent to:

Ruth E. Malone, RN, PhDInstitute for Health Policy Studies, Box 0936, Laurel Heights Cam-pus, University of California, San Francisco, San Francisco, CA94143

415 476-3273 • rmalone@itsa.ucsf.edu