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How to influence public corporation policies

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American Indians have often held tenuous relations with public companies that either operated on or near tribal lands. It is a common story that all too frequently Indians were not adequately compensated for resources extracted from their lands, not to mention for the theft of land itself, or were left with the residual effects of a company's development or manufacturing process. For quite some time, perhaps far too long, American Indians have stood on the outside looking in the corporate window, wondering what exactly was going on in there.

But the times are changing. In an effort to support Nez Perce fishing rights the Calvert Social Investment Fund has stated in a letter to Idacorp, Inc. its intention to present a shareholder resolution asking the firm for a written policy on dealing with indigenous peoples. Tribal activism is no longer necessarily consigned to placards, marches and writing congressional representatives. Likewise, in Arizona, the Hopi Tribe is working with shareholder groups, including Lehman Brothers, which owns 57 percent of Peabody Energy common stock, to propose a resolution that would require the company to phase out or reduce its use of water from the Navaho Aquifer to slurry coal. Studies indicate that the aquifer is diminishing and that as many as seven of 14 Hopi wells have already emptied, leaving the Hopi higher and drier than they are normally accustomed to being.

The results of these shareholder proposals are, so far, encouraging. Idacorp is working on a response to the Calvert request for an indigenous peoples policy, and Peabody representatives have met with three Lehman vice presidents, Hopi officials, and two of the groups that joined in the filing.

Shareholder resolutions are one means by which constructive dialogue and expression, although not free, are enabled within the legally mandated operations and structural relationships of public companies. It is a way that conscientious investors can be heard. Steven J. Schueth, former president of the Social Investment Forum, stated it this way in a letter to the Securities and Exchange Commission when the SEC was considering changes in its rules on shareholder proposals: "It is our experience that the shareholder resolution process plays a crucial role in adding value to companies in two important ways. First, it plays a direct role by bringing key issues to the attention of a corporation's directors, managers and other stockholders. Second, it plays an indirect, but perhaps more important role, by fostering a healthy climate for dialogue among investors and management."

As happened with the Nez Perce and Hopi resolution actions, companies are often more willing to discuss issues when faced with the prospect of an effective shareholder resolution. This often renders the resolution unnecessary as discussions continue and management acts to legitimately address shareholders' concerns.

What exactly is a shareholder resolution? Also referred to as a shareholder proposal, it is a recommendation or requirement that a company's management and/or its board of directors take a particular action. To be eligible to submit a shareholder proposal, the shareholder must own $2,000 of a company's voting shares. The Security and Exchange Commission, as stipulated in its May 1998 Amendments to Rules on Shareholder Proposals, decided to limit the amount required to this relatively low level as a means of providing an avenue of communication for small investors. Although an investor must have owned this level of voting stock for a continuous period of at least one year, it opens an opportunity for tribal groups to have their concerns heard from within companies whose policies may affect their people or other indigenous peoples -- provided they plan and prepare.

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Should a company not respond to appeals by a shareholder to examine its operating practices, the filing of a shareholder proposal might follow. It would be included on the company's annual proxy card, along with any supporting statement. Either the shareholder or a representative who is eligible under state law must attend the annual shareholders meeting to present the resolution. This is typically the one time of the year when companies are held accountable to their owners.

"The notion that shareholders own the companies in which they hold stock is central to the concept of publicly-traded companies in America," states Schueth. "As owners of the company, shareholders have both a right and a responsibility to take an interest in the company's performance, policies and practices. Every proxy season, the management of some publicly-traded companies are publicly held accountable by shareholder resolutions that focus on traditional corporate governance and corporate social responsibility questions."

Increasingly, as indigenous advocacy organizations gain in sophistication and resources, and as tribes accumulate needed assets, it is becoming understood that the application of strategies that seek to build strong coalitions can also occur among company shareholders and within the boardroom. American Indians have gained experience in building political alliances to impact legislation. Likewise, Indians have teamed at times with non-governmental organizations and religious institutions to draw attention to and prevent continued human rights violations and environmental crises. Even poor judicial rulings have been corrected by Indians working together, and with others, to see justice done. It just may be time to cast off our own stereotypes of big business and learn how to better play the inside game.

Acting responsibly within these corporate procedures can also serve to connect the actions of companies to international processes that have already established guidelines respecting indigenous peoples rights. Calvert Asset Management's social analysis criteria, for example, includes a section dealing with indigenous peoples that is principally founded upon international treaties and conventions established by the United Nations and the International Labor Organization. These include requesting that "companies operating on or directly impacting the land of indigenous peoples should support appropriate development that respects indigenous territories, cultures, environment and livelihoods." It further calls upon companies "to have adopted and implemented guidelines that take proactive measures in dealing with indigenous communities." These include, among others, respect for the land, sovereignty and resource rights of indigenous peoples.

The art of trade and commerce is an American Indian tradition that needs to be reinvigorated throughout much of Indian country. Prior to graduating high school every American Indian student should have received a primer course in business and entrepreneurship. One need only look around these days to witness the remarkable accomplishments of tribal leaders and economic planners who have successfully applied their business education and competitive savvy. Not a few American Indian graduates from Harvard University's business school and elsewhere are now running operations that are changing the face of the Indian world.

The purchase of shares in publicly held companies can be both good investment and effective strategy for tribes seeking to leverage Indian country's interests.