Despite Loss, Activists Cheer Fido Sudan Vote
Article published on Mar 20, 2008
By Hannah Glover
BOSTON — Even though their bid was denied, human rights activists cheered the results of Wednesday’s shareholder meeting at Fidelity as proof that a significant number of investors don’t want their mutual funds to hold genocide-linked stocks.
Human rights advocates wanted Fidelity to require its managers to screen out investments in firms that “substantially contribute to genocide, [have] patterns of extraordinary and egregious violations of human rights, or crimes against humanity." More than a quarter of those who voted in the contest supported the resolution. Fidelity opposed the change.
The resolution appeared on the proxies for a dozen funds, although only two — the $9.3 billion Fidelity Capital & Income Fund and the $1.96 billion Fidelity Select Health Care Portfolio — had enough votes representing enough shares to constitute a quorum. The resolution garnered support from 27% of Fidelity Capital & Income Fund shareholders and 28% of those representing the Fidelity Select Health Care Portfolio.
For its part, Fidelity said the two funds that were voted on today did not contain any shares of Sinopec or PetroChina, the companies commonly associated with pumping funds into Khartoum’s genocidal coffers. Fidelity declined to make any of its execs available for comment after the meeting.
Several fund shops say an alternative to prohibiting investment in certain companies is to use their influence to force change at those companies.
Advocates say the results of the vote are encouraging. Shareholder resolutions typically receive less than 10% of the vote, said Timothy Smith, director of socially responsive investing at Walden Asset Management and chairman of the Social Investment Forum. What’s more, individual shareholders are more likely to toss their unopened proxy materials in the trash than to vote the issues. Meanwhile, the more reliable voters — large institutional investors — generally vote for management recommendations.
“We are gratified at the surprisingly large share of the vote we received,” said Eric Cohen, chairman of activist group Investors Against Genocide.
During the meeting, which drew roughly 30 shareholder representatives, Cohen scolded Fidelity for trying to keep the issue from reaching a proxy vote. “Fidelity continues to oppose the proposal, and its opposition will also ultimately fail, if not today, then in another shareholder vote in the future,” he said.
The question will appear on proxies for the Contrafund and Puritan Trusts, originally scheduled for Wednesday, on April 16. Shareholders of funds including the Devonshire Trust and the Fidelity Securities Funds are expected to vote by the May 14 meeting.
Investors Against Genocide will continue to build awareness of the cause and push for future votes not only at Fidelity, but at American Funds, Vanguard, Barclays, Franklin Templeton, T. Rowe Price and others, Cohen vowed.
“In this new century, investors are broadening their scope,” said Walden’s Smith. Failure to address increasing concern for environmental, social and governance issues will prove bad for business, he said.
Eric Roiter, Fidelity Management & Research Company general counsel and senior vice president, warned shareholders against believing in a “false dichotomy” that suggests returns are the only factor that plays into the stock-picking process. Factors including political risk also come into consideration, said Roiter, who added that Fidelity could probably do a better job of conveying this comprehensive process to its shareholders.
Although Roiter noted that neither of the two funds in question have holdings in Sinopec or PetroChina, Investors Against Genocide, in a subsequent teleconference, said that Fidelity and its overseas counterpart, Fidelity International, own at least $900 million worth of stock in those two companies.
“We delegate investment decisions to our fund managers,” Roiter said. He stressed fund managers’ responsibility to uphold their fiduciary responsibility to invest other people’s money in the most suitable way.
We respect the investment decisions and preferences of all of our shareholders,” Roiter said. “You do have a choice apart from funds at Fidelity.”
That is not to say board members and trustees do not listen carefully and consider shareholder concerns, said Dennis Dirks, an independent member of the board of trustees. “This is not an issue that goes undiscussed,” he said. “We take it very seriously.”
Interested investors could also look at quarterly filings of each of the funds in which they invest, which are free to the public and filed with the Securities and Exchange Commission, Roiter noted.
“Most people aren’t that sophisticated,” said Daniel Golden, 79, a Newton Centre resident who says he has invested in the Fidelity Contrafund “since day one.” Wednesday’s discussion disappointed him, he said. “I don’t understand why [Fidelity] is so adamant about this,” he said. “I’m just puzzled at the reluctance.”
Article published on Mar 20, 2008
By Hannah Glover
BOSTON — Even though their bid was denied, human rights activists cheered the results of Wednesday’s shareholder meeting at Fidelity as proof that a significant number of investors don’t want their mutual funds to hold genocide-linked stocks.
Human rights advocates wanted Fidelity to require its managers to screen out investments in firms that “substantially contribute to genocide, [have] patterns of extraordinary and egregious violations of human rights, or crimes against humanity." More than a quarter of those who voted in the contest supported the resolution. Fidelity opposed the change.
The resolution appeared on the proxies for a dozen funds, although only two — the $9.3 billion Fidelity Capital & Income Fund and the $1.96 billion Fidelity Select Health Care Portfolio — had enough votes representing enough shares to constitute a quorum. The resolution garnered support from 27% of Fidelity Capital & Income Fund shareholders and 28% of those representing the Fidelity Select Health Care Portfolio.
For its part, Fidelity said the two funds that were voted on today did not contain any shares of Sinopec or PetroChina, the companies commonly associated with pumping funds into Khartoum’s genocidal coffers. Fidelity declined to make any of its execs available for comment after the meeting.
Several fund shops say an alternative to prohibiting investment in certain companies is to use their influence to force change at those companies.
Advocates say the results of the vote are encouraging. Shareholder resolutions typically receive less than 10% of the vote, said Timothy Smith, director of socially responsive investing at Walden Asset Management and chairman of the Social Investment Forum. What’s more, individual shareholders are more likely to toss their unopened proxy materials in the trash than to vote the issues. Meanwhile, the more reliable voters — large institutional investors — generally vote for management recommendations.
“We are gratified at the surprisingly large share of the vote we received,” said Eric Cohen, chairman of activist group Investors Against Genocide.
During the meeting, which drew roughly 30 shareholder representatives, Cohen scolded Fidelity for trying to keep the issue from reaching a proxy vote. “Fidelity continues to oppose the proposal, and its opposition will also ultimately fail, if not today, then in another shareholder vote in the future,” he said.
The question will appear on proxies for the Contrafund and Puritan Trusts, originally scheduled for Wednesday, on April 16. Shareholders of funds including the Devonshire Trust and the Fidelity Securities Funds are expected to vote by the May 14 meeting.
Investors Against Genocide will continue to build awareness of the cause and push for future votes not only at Fidelity, but at American Funds, Vanguard, Barclays, Franklin Templeton, T. Rowe Price and others, Cohen vowed.
“In this new century, investors are broadening their scope,” said Walden’s Smith. Failure to address increasing concern for environmental, social and governance issues will prove bad for business, he said.
Eric Roiter, Fidelity Management & Research Company general counsel and senior vice president, warned shareholders against believing in a “false dichotomy” that suggests returns are the only factor that plays into the stock-picking process. Factors including political risk also come into consideration, said Roiter, who added that Fidelity could probably do a better job of conveying this comprehensive process to its shareholders.
Although Roiter noted that neither of the two funds in question have holdings in Sinopec or PetroChina, Investors Against Genocide, in a subsequent teleconference, said that Fidelity and its overseas counterpart, Fidelity International, own at least $900 million worth of stock in those two companies.
“We delegate investment decisions to our fund managers,” Roiter said. He stressed fund managers’ responsibility to uphold their fiduciary responsibility to invest other people’s money in the most suitable way.
We respect the investment decisions and preferences of all of our shareholders,” Roiter said. “You do have a choice apart from funds at Fidelity.”
That is not to say board members and trustees do not listen carefully and consider shareholder concerns, said Dennis Dirks, an independent member of the board of trustees. “This is not an issue that goes undiscussed,” he said. “We take it very seriously.”
Interested investors could also look at quarterly filings of each of the funds in which they invest, which are free to the public and filed with the Securities and Exchange Commission, Roiter noted.
“Most people aren’t that sophisticated,” said Daniel Golden, 79, a Newton Centre resident who says he has invested in the Fidelity Contrafund “since day one.” Wednesday’s discussion disappointed him, he said. “I don’t understand why [Fidelity] is so adamant about this,” he said. “I’m just puzzled at the reluctance.”