a121176px14a6g.htm
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FOR
IMMEDIATE RELEASE
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Napa,
CA
December
11, 2007
Contact:
Jack Ucciferri
(707)
252-6166 Voice
(707)
257-7923 Fax
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Shareholder
Proposal Revisits Fiduciary Duty at Agribusiness Goliath,
Monsanto
Napa,
California -- Harrington Investments, Inc., (HII) a socially responsible
investment advisory firm, has announced the introduction of a binding amendment
to Monsanto Corporation’s corporate bylaws that could bar corporate
indemnification of directors who fail to adequately oversee corporate activities
that cause “harm to the natural environment, public health, or human
rights.”
“The
idea
behind this resolution is that by increasing the personal accountability of
corporate directors, our proposed bylaw amendment would encourage these
fiduciaries to better represent the shareholders of the corporation – and to
serve as better guardians of the public interest,” said John Harrington,
President and CEO of Harrington Investments.
The
new
vehicle for improving corporate governance will be on the proxy for the January
16, 2008 shareholder meeting at Monsanto (MON).
“We
chose
Monsanto as our target for this new approach, because we view this company
as
facing significant legal and reputational liabilities that might have been
prevented with better board oversight. These include allegations of selling
potentially dangerous products abroad, bribing foreign government officials,
and
releasing genetically engineered products that have not been proven safe for
human consumption or the natural environment. Such activities are bad
for our company’s reputation, and could lead to substantial liabilities,” said
Harrington.
As
recent
legal actions against the company demonstrate, failure of the management to
oversee these issues can lead to significant liabilities. In 2005,
Monsanto was forced to pay a $1.5 million fine to settle allegations that
employees bribed Indonesian officials to bypass environmental
laws. In January of this year, a French court fined Monsanto
Agriculture France SAS and Monsanto's French distributor, Scotts France, after
a
former chairman of Monsanto Agriculture France was found guilty of false
advertising. Then, in February of this year, it was reported that the
British Environment Agency had begun an investigation into “one of the most
contaminated sites in Wales” - a former Monsanto dump that could cost more than
$200 million to clean up according to a reported estimate. In October
of this year, Monsanto was sued by dozens of West Virginians alleging that
pollution from a now-defunct Monsanto factory caused them to contract various
types of cancer; they are seeking $5 million each in compensatory damages and
$300 million in punitive damages. This lawsuit is particularly
worrisome to investors because it is reminiscent of a 2002 settlement in which
the company agreed to pay the preponderance of a $700 million settlement to
offset damages to human health and the natural environment in Anniston,
Alabama.
The
management of Monsanto, in its statement opposing the resolution, has asserted
that the amendment would increase the vulnerability of board members to
lawsuits. But according to Harrington, the board members would still have ample
protection under existing law, since the courts generally would not hold board
members personally liable where they exercise reasonable business judgment
and
oversight. The bylaw amendment does not change that, but seeks to
create new indemnity rules applicable to directors who may have failed to
carefully oversee environmental, human rights or public health matters. In
egregious cases, Harrington believes directors, as fiduciaries, and not the
shareholders, should bear these liabilities.
Harrington
cited a written public statement by Hugh Grant, Monsanto’s CEO, in which Grant
wrote that “an unwavering commitment to integrity in all business operations is
at the core of our corporate behavior. We must never take this commitment for
granted… Integrity means doing what is right even when we are faced with
situations not governed by any specific law or regulation. Sometimes the right
thing to do is not clear, but at Monsanto our job is to seek and find the right
answer in every business situation.”
Harrington
challenged Grant’s statement, "I have the impression that it is mostly ‘noise’
and has little to do with the reality of Monsanto’s continuing egregious
corporate conduct." Harrington added: "At least our proposal would
add a concrete mechanism to encourage directors and officers to act as true
fiduciaries in considering the interests of all stakeholders – including
shareholders - who may be impacted by Monsanto’s operations."
Monsanto
steers itself into controversies in many of the areas where they
operate. Recently, Monsanto Corporation has been the focal point of
widespread protests about potential dangers to public health and the natural
environment posed by promulgation of genetically modified organisms
(GMO). Media reports have linked thousands of farmer suicides in
India to use of Monsanto products. Additionally, due to concerns that the
technology would threaten the livelihood of poor farmers worldwide, the United
Nations’ Convention on Biological Diversity voted overwhelmingly in 2006 to
uphold an international moratorium on Monsanto’s “Terminator”
seeds. Monsanto’s introduction of rBGH, which is injected
into cows to increase milk production, has been the subject of much
controversy.
This
resolution is the latest in Harrington Investments’ longstanding
ownership-advocacy relationship with Monsanto management. For
instance, a 2005 resolution called for the formation of an ethics oversight
committee in response to Monsanto being fined for violating the Foreign Corrupt
Practices Act. However, Monsanto omitted the resolution from the
ballot asserting that it related to the company’s “ordinary
business.”
For
the
past 30 years, Harrington Investments, Inc. and John Harrington have been
pioneers in socially responsible investing and shareholder
advocacy. HII manages approximately $200 million in assets for
institutional and individual investors concerned with social and environmental,
as well as financial performance.
In
addition to Monsanto, Harrington has introduced several other binding corporate
bylaw amendment resolutions this year. If approved, these bylaw
proposals would result in such innovations as the creation of board level human
rights or sustainability committees.
This
communication is not a proxy solicitation, and Harrington Investments will
not
accept any proxies. Harrington Investments urges shareholders to vote “FOR” the
indemnification stockholder proposal on Monsanto management’s
proxy.
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