c. 1998 Religion News Service

UNDATED _ A row of religious leaders who filed into the annual meeting of Loews Corporation May 12 had no illusions the tobacco-owning company would bow to their proposal to reduce teenage smoking. But neither did they expect CEO Laurence Tisch to turn the tables on them and blast off a sermon against the misguided morality of modern America.

In the Wall Street conference room where about 40 stockholders had gathered, Tisch declared the”whole nation is going crazy”in the anti-smoking crusade and the tobacco industry was suffering through a new”McCarthy era”of political persecution, members of the church delegation reported.

Loews owns, through a subsidiary, several cigarette brands, including Newport.

What set Tisch off was a stockholder resolution offered by Frank Coleman, an investment director of Christian Brothers Investment Services, Inc., which manages the portfolios of 100 Catholic institutions. This spring, religious institutional investors such as Coleman are pushing social-cause resolutions with 150 U.S. companies. His proposal was to link executive pay raises to lower rates of teen smoking.”Typically, at shareholder meetings you get up and say your peace, and the reaction (from the CEO) is `Thank you, next item,'”said Coleman, noting he got the silent treatment at the April 30 meeting of cigarette manufacturer Philip Morris. But the proposal at the Loews gathering sparked a lengthy exchange between the tobacco industry leader and the anti-smoking moralists, along with Tisch’s homily.”I’d rather be lectured than totally ignored,”said Coleman, who represented Catholic institutions with 60,000 shares or about $6 million worth of Loews stock.

The resolution was reduced to ashes, and yet the meeting offered the latest evidence that companies are finding it hard to ignore the 275 religious institutional investors who constitute the New York-based Interfaith Center on Corporate Responsibility.

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In April, Sara Lee Corp. announced plans to sell off its tobacco business to a British tobacco company, after a two-year shareholders’ campaign organized by the ICRC. Company officials acknowledged at the time that outside pressure was a”factor”in the decision. The Rev. Michael Crosby, a Catholic priest who coordinates the ICRC’s anti-tobacco drive, expressed delight that Sara Lee”will no longer have a tobacco stain on its operations.” Sara Lee, in addition to its baked goods, Jimmy Dean sausages and other well-known products, has owned a unit that sells rolling tobacco under the brand name Drum. The Wall Street Journal reported April 8 that Sara Lee’s little-known tobacco unit had profit margins fatter than any other part of its business.

Around the same time, RJR Nabisco decided to halt its”Joe Camel”advertising worldwide, and the first announcement came in a letter to stockholders, including two Catholic religious orders belonging to the ICRC.

The Immaculate Heart Missions and the Sisters of Mercy Regional Community of St. Louis had submitted a shareholder resolution calling on RJR Nabisco to”end Joe Camel ads anywhere in the world.”The company had already decided to pull the ads in the United States. Crosby said”many pressures,”including the stockholder campaign, led to the company’s action.

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Loews Corporation, with headquarters in New York, has not yet disclosed the precise margin of the vote against Coleman’s resolution at the May 12 meeting, although the church representatives said they were told it drew under 4 percent of the proxy vote. Members of the Tisch family own one-third of Loews stock.

The company said its vice president for public affairs, Candace Leeds, was vacationing in Rome, and it declined to offer another spokesperson to comment on a detailed account of the meeting offered by the ICRC.

Coleman, whose Christian Brothers organization manages portfolios with a combined worth of more than $2 billion, arrived at the meeting with three other church shareholder activists and a prepared statement that called on Tisch to begin”putting your money where your words are”and tie executive pay hikes to reductions in teenage smoking.”That’s what pushed his (Tisch’s) button,”said Timothy Smith, one of the four church representatives and executive director of the ICRC.

Tisch has said he does not want to sell cigarettes to young people. His tobacco subsidiary, Lorillard, is party to the national tobacco settlement that would impose hefty penalties on the industry if it fails to meet targets for reducing teen smoking. The settlement was negotiated by state attorneys general.

Smith supplied an account of the meeting in which Tisch is quoted as alluding to the anticommunist frenzy whipped up by the late Wisconsin Sen. Joseph McCarthy in the 1950s:”Some of you will remember the McCarthy era. The tobacco industry is going through a McCarthy era of its own right now. We’re being unfairly pilloried. And it’s all being motivated by political interests.” Tisch has reportedly said drugs and alcohol pose a more alarming threat to young people than tobacco, and the industry”made a big mistake”in agreeing to the penalty portion of the national tobacco agreement.”The whole country is going crazy on the issue of youth smoking. Pretty soon we hope it will come to its senses,”Tisch reportedly told the shareholders.

Smith said the Loews meeting lasted 90 minutes.”It would have been over in 45 minutes if we weren’t there,”said Smith, who was accompanied by Coleman and two ICRC staffers.

The annual meetings of most American corporations are held in the spring. This year, activist shareholders have filed nearly 300″social policy”resolutions that call on companies to deal with problems ranging from polluted rivers in their backyards to child labor overseas, according to the Investor Responsibility Research Center, a Washington non-profit organization that conducts impartial research for institutional clients.

At least 85 resolutions take aim at the swelling of executive compensation packages, according to the research center. The stockholders are waging battles to either cap the salaries or peg future raises to”social criteria”such as environmental performance and equal opportunity for women and minorities.

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