Economic Justice for Victims of Bhopal
Shareholder activism inside DowDuPont’s annual shareholder meeting raises a call for justice for Bhopal victims.
On Wednesday, April 25, 2018 in Chicago, supporters of survivors of the devastating 1984 gas rupture in Bhopal, India will protest outside the annual stockholder meeting of DowDuPont, Inc. ($DWDP). Inside the meeting, Investor Voice will stand to present a shareholder proposal it filed on behalf of multiple shareholder clients of Newground Social Investment that calls on the Company to take responsibility for its disaster. The proposal will be presented by Bikash Kanungo, PhD student and environmental justice activist with the Bhopal Shareholder Group, supported in Chicago and around the globe by a broad coalition of investors and activists – including actor Martin Sheen – who are concerned about justice for the Bhopal victims.
The Newground proposal specifically calls for management to modify DowDuPont’s governance rules, to lower the threshold for stockholders to call a Special Meeting from an impossibly high 25% down to 10%. This rule change is necessary so shareholders can discuss important topics that arise between annual shareholder meetings, such as evolving liability for the 1984 Bhopal disaster the Company acquired when it purchased Union Carbide in 2001.
Ever since Dow Chemical acquired Union Carbide (and subsequently merged with DuPont in 2016), the Company has denied any responsibility for the tragedy – which ultimately caused as many as 16,000 deaths.
The Company claims that it should not be held liable for any site cleanup, be required to pay any restitution to families of the deceased, or contribute to the ongoing medical costs of thousands of survivors who for 34 years have lived with the horrific impacts of the accident. Why? Because, it asserts, the Bhopal plant did not belong to Dow at the time.
However, in corporate acquisitions the purchaser knowingly takes possession of both the assets and liabilities of the company being purchased. Since it knew about the Bhopal disaster, Dow presumably bought Union Carbide – and DuPont subsequently merged with Dow – with the assumption that it/they could stall, engage in legal maneuvers, and enjoy use of the assets while reneging on any responsibility for the liabilities.
Despite an ongoing lawsuit in the Indian courts and calls for the Indian government to seize DowDuPont’s assets worldwide if it does not act responsibly, the Company has never disclosed this very real threat to shareholders or to the SEC, which we consider a dereliction of management’s fiduciary duty to its owners.
If enacted, this proposal would allow stockholders representing 10% of shares to call a Special Meeting where shareholders set the agenda, not management, whether to discuss this topic or any other.
Below is the full text of the Newground proposal and supporting arguments, as they appear on page 81 of the 2018 DowDuPont Proxy Statement:
AGENDA ITEM 9: STOCKHOLDER PROPOSAL — MODIFICATION OF THRESHOLD FOR CALLING SPECIAL STOCKHOLDER MEETINGS
Resolved: Shareowners request that the Board of DowDuPont Inc. (“Company”) take the steps necessary to amend Company bylaws and appropriate governing documents to give holders of 10% of outstanding common stock the power to call a special shareowners meeting. To the fullest extent permitted by law, such bylaw text in regard to calling a special meeting shall not contain exceptions or excluding conditions that apply only to shareowners but not to management or the Board.
Supporting Statement
Under DowDuPont’s certificate of incorporation, a special shareholder meeting can only be called by 25% of shareowners. This impossibly high threshold – which could require $39.4 billion in stock – is unreasonable and out of line with Company peers.
This Proposal would grant 10% of shareowners the ability to convene a meeting to consider important matters. The Proposal does not alter the Board’s power to call special meetings; rather, it grants shareowners the reasonable right to call for consideration of important matters that may arise – and have arisen – between normally-scheduled annual meetings.
It appears that management has mishandled a variety of issues in ways that have increased both cost and liability for shareowners – sometimes significantly.
When Dow Chemical acquired Union Carbide in 2001, it acquired significant legal, financial, and reputational liabilities that stemmed from the 1984 Bhopal gas disaster, and other pollution of the lands and water of communities around the former Union Carbide Bhopal plant.
For over twenty-five years Union Carbide has been declared an “absconder” from Indian criminal proceedings – making itself subject to an Asset Attachment Order designed to compel a court appearance. Parent company Dow acquired this escalating legal risk from the same case, having just this year received formal notice to appear from the same Indian court. Dow now confronts the prospect of becoming subject to a national Asset Attachment Order.
Following intense public pressure, India filed a Supreme Court petition to reopen civil litigation that seeks compensation of over $1 billion. A number of parties have filed briefs in the case to request a Mareva Order – which would freeze assets of the Company. This is the equivalent to having a senior-level claim or lien on the Company, which would allow seizure of DowDuPont assets worldwide.
India’s economy has grown between 7–9% annually and its chemical sector is expected to reach $403 billion by 2025. This emerging legal threat to the Company’s Indian assets may block or diminish participation in this growth, a risk that would significantly deprive shareowners.
However, despite having a legal duty to do so, DowDuPont has failed to disclose these risks in public filings or statements to shareowners. It has instead issued inadequate or misleading reports – a possible dereliction of Directors’ fiduciary duty.
For these reasons, shareowners need a reasonable 10% threshold to call a special meeting.
Therefore: Please vote FOR this common-sense governance enhancement that offers shareowners a critical right which DowDuPont’s 25% threshold places out of reach.
To follow the 4/25/18 DowDuPont annual shareholder meeting live, join the audio webcast at 12:00pm EDT on Wednesday, April 25th – be sure to log in early to get any registration details out of the way before start time.
Audio Webcast dial-in number: 800–289–0462 (no visuals)
Participant Passcode: 772234
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Originally posted at Newground Social Investment
