Overdraft fees: Trillium Asset Management has a new resolution at Bank of America and JPMorgan Chase, asking each to report “evaluating overdraft policies and practices and the impacts they have on customers.” The resolution is concerned about the impact overdraft fees have on the poor. A similar proposal last went to a vote in 2010 and earned 23.6 percent support at BB&T. The proposal notes $35 overdraft fees that provided $1.6 billion to Bank of America in 2017 (2.2 percent of its total income and a third of its non-interest income). At JPMorgan Chase, the fee is $34 per check and it produced $1.8 billion in fees (2 percent of total income and 39 percent of service charge income). The proposal notes the Center for Responsible Lending found last year that the biggest U.S. banks collected near $11.5 billion in overdraft fees in 2017, with most of the fees incurred by low-income, single, non-white renters, and that a high volume of overdraft fees come from those heavily reliant on Social Security Income. The resolution argues that the fees charged per check appear to be unrelated to the actual costs incurred, and presents reputational risks to the banks, as well as litigation risks that have already prompted settlements in the tens of millions.

Tax windfall: Trillium takes up another issue at Gilead Sciences. It wants a report on how the company used extra income from last year’s tax reform, seeking information on “how the company plans to allocate tax savings as a result of the Tax Cuts and Jobs Act.” This resolution points out the new law cut the corporate tax rate from 35 percent to 21 percent and is estimated to provide the largest U.S. companies with a tax windfall of $150 billion. It reasons that the bill aimed to “boost economic growth and companies long-term investment in the American economy,” but says it remains unclear how Gilead has invested the money. Quoting BlackRock CEO Larry Fink’s call for more transparency to investors about long-term company strategies, it says companies are faced with a “particularly critical moment” for disclosure. While Gilead might “invest in workers, benefits, jobs, communities, capital investments, R&D, and make acquisitions,” Trillium says, what it actually will do remains unclear. In contrast, it notes that industry peer Amgen says it will open a new biologics plant and create 300 new jobs, while other firms also have detailed plans for “workforce development, infrastructure enhancement, and corporate giving.” The resolution says widening economic inequality means scrutiny of corporate use of the tax windfall has intensified. Gilead has challenged the resolution at the SEC, arguing the proponent did not prove stock ownership and also that it concerns ordinary business. (A broader proposal about sustainability reporting, prompted by tobacco concerns, was omitted at Walgreens; see p. 71.)

MAJORITY SUPPORT FOR DISCLOSURE OF OPIOID FINANCIAL RISK

Donna Meyer, PH.D.
Director, Shareholder Advocacy, Mercy Investment Services

Since mid-2017, Investors for Opioid Accountability (IOA), a coalition founded by Mercy Investment Services and the UAW Retirees Medical Benefits Trust, has become the leading shareholder force in the fight against the opioid epidemic ravaging the United States. It now represents 54 investors with more than $3.5 trillion in assets under management. In 2017, more than 70,000 Americans died from drug overdoses, the most ever in a single year. Of the 700,000 American deaths from drug overdoses since 1999, more than two-thirds were from opioids and many involved prescription opioids.

Banking ethics: Harrington Investments wants Wells Fargo to produce a report by October “regarding options for the board of directors to amend our Company’s governance documents to enhance fiduciary oversight of matters relating to customer service and satisfaction.” The resolution provides a long list of the bank’s recent track record opening fake accounts, selling redundant auto insurance and other malfeasance that has resulted in fines and enforcement action. It says the report would help restore its reputation and help “fix a crippled business model.” The bank has challenged the proposal at the SEC, arguing it concerns ordinary business and is too vague. Faith-based proponents withdrew a 2018 banking ethics proposal after the bank agreed to publish a review of its business standards and ethics practices, and related risk management. That resolution was a revised version of a 2017 proposal that earned 21.9 percent support. In late January, Wells Fargo issued a new Business Standards Report that ICCR heralded as a response to its proposals.