Toward a Wider Constituency

It was a piece of contemporary American theater, exceeded in noise, confusion and chaos only by a performance of Hair. General Motors' annual meeting last week in Detroit's enormous Cobo Hall played to an S.R.O. audience. Coolly and with remarkable stamina Chairman James M. Roche presided for 61 hours, answering a determined barrage of questions. This year, for the first time, the usual chorus of gadfly critics was bolstered by a group of more formidable antagonists. Among them: Harvard Biologist Dr. George Wald, Avis ex-President Robert (Up the Organization) Townsend and the new U.A.W. president, Leonard Woodcock.

At issue were two precedent-setting resolutions proposed by "Campaign G.M.," an organization started by four young Washington lawyers inspired by some of Nader's efforts. One of the proposals would have added three "public representatives" to the corporation's 23-man board. The nominees: Environmentalist Dr. Rene Dubos; Betty Furness, who was Lyndon Johnson's consumer adviser; and the Rev. Channing Phillips, who would have been the first black ever to sit on G.M.'s board. The second proposal would have created a Shareholders' Committee for Corporate Responsibility, authorized to spend one year investigating and increasing the company's contributions "to the social welfare of the nation" -such as its efforts to produce safer and nonpolluting cars. The critics argued that G.M.'s management should respond to a wider constituency -not only shareholders and suppliers, dealers, employees and customers, but everyone who breathes the air that cars pollute.

Silent Shareholders. As expected, the proposals went down to overwhelming defeat, winning less than 3% of the vote. One reason for the lopsided result was that G.M.'s shares are widely dispersed among 1,400,000 stockholders, and the campaign's organizers, with only a $30,000 budget, could not afford to contact all of them. More important, the outcome reflected the entrenched power of management, backed by a silent majority of shareholders who usually give the company their proxies to vote as it wishes.

This time the company had worked harder than ever to get those proxies. "The project is using General Motors as a means through which it can challenge the entire system of corporate management in the United States," declared Chairman Roche in a statement mailed to shareholders. The corporation claimed that any new directors representing "special interests" would introduce "partisanship" to the board. As for forming a special shareholders' committee, the corporation contended that it "would do serious damage to General Motors and to its stockholders and to the general public," because it would be "structured for harassment and publicity." G.M. also sent every shareholder a 2-1 -page booklet defending its record on safety and pollution. Roche himself wrote to the heads of foundations, bank trust departments and university endowment funds, urging them to vote down the proposals, and G.M. officials followed up with phone calls.

For all its intensity, the corporation's campaign was not completely successful. Harvard's trustees cast their endowment-fund shares for management -against the expressed wishes of the faculty, students and a 3-to-2 majority of alumni. Yale abstained. The Carnegie and Rockefeller foundations, while voting against the proposals, pointedly criticized the corporation. The board of the Rockefeller Foundation set out its reasons in a letter to G.M. (see box) and declared: "We are not prepared to let the matter rest."

Proxies for People. Neither are the organizers of Campaign G.M. They are already preparing for another assault next year, and last week in Detroit they held the "First Annual Convention on Corporate Responsibility." It was more like a rally than a convention, but it made plain that G.M. was only a test case. Other social critics are entering the proxy wars, notably Saul Alinsky's "Proxies for People," which plans to solicit proxies from foundations, union-welfare funds and other groups and to use them to pressure corporations into more diligently pursuing social goals. Alinsky calls his technique "mass ju-jitsu"; he is so sure of success that he confidently promises future corporate annual meetings will have to be held in Yankee Stadium.

Such efforts find G.M. a more susceptible target than most companies because it is so conspicuous, and its shares have traditionally been bought and held by large numbers of individual investors. The shares of many other big U.S. companies tend to be more concentrated in the hands of bank trustees and mutual-fund managers. Bank trust departments alone held $167 billion worth of common stock at the end of 1967. Allied with institutions that wield huge numbers of proxies, corporate managers will not be easily outvoted. But the public interest is likely to make itself felt in one way or another. G.M.'s experience shows that unless those who hold the votes become more sensitive to public concerns, managers will face increasing demands for Government scrutiny of how they use their power.

This file is automatically generated by a robot program, so reader's discretion is required.