Shareholder activism or apathy?
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Ways to get corporate attention
You can get the attention of top executives by using one of numerous tactics, such as open dialogue, if you're a big investor. But small investors' best chance to make a difference, collectively, is by voting their proxies. Among the items to vote for are shareholder resolutions. These are the ballot items that company management most frequently recommends you vote against. To them, shareholder resolutions are a nuisance.

Socially responsible fund firms such as Domini and Calvert use various strategies to get management attention, including introducing resolutions. One might be a proposal requesting that a company report on political contributions, another might be on the feasibility of amending corporate policy on laboratory animal care (if it's a pharmaceutical firm, for example). Or -- a popular concern these days -- it could be a proposal to link executive pay with performance. Many times, shareholder resolutions address social, environmental or ethical issues that management would rather not deal with because -- let's face it -- these matters don't have an immediate positive impact on stock price.

Anyone with $2,000 invested in a stock for more than a year can introduce a proposal. However, you have to overcome some major hurdles to get proposals on the ballot, since companies frequently get permission from the Securities and Exchange Commission to throw them out. The best bet is to work with experienced investor coalitions such as Co-op America or Social Investment Forum to get an item on the ballot.

But at the very least, investors should vote their proxies and not lose the opportunity to demand accountability from corporate management. This is a boomer trait, isn't it? Aren't we the original noisemakers who are most comfortable questioning authority, whether governmental or corporate? Didn't the vanguard boomers stage protests and sit-ins and marches to address issues of social policy or injustice? Well, we have chances to effect change quietly now, by marking our ballots, that can make a difference on matters ranging from global labor standards to global warming.

Let's not kid ourselves, though. Most of the time, even when passed, these resolutions are nonbinding, meaning they can largely be ignored by boards of directors and senior managements. Last year, only 18 of 1,056 shareholder proposals presented were binding, according to Institutional Shareholder Services. But sometimes, to avert criticism that might adversely impact its product, brand or image, a company will adopt a policy that not only makes it look better, but actually helps it become a responsive corporate citizen.