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General Motors Proxy Challenge Catches Harvard In The Middle

By Scott W. Jacobs

A potential "proxy fight" between the management of General Motors and a group of Washington lawyers supported by Ralph Nader, automotive safety crusader, has forced Harvard into an uncomfortable choice of sides in casting its 287,000 GM stockholders' votes this year.

With the controversy still in its initial stages, however, George F. Bennett '33, Treasurer of Harvard College, has indicated that the University sees no reason to oppose the GM management at the annual stockholders' meeting in May.

Early last month, Nader called for public access to the workings of large corporations like GM, a voice for the general public in their decisions, and more research into the consequences of their actions.

The Washington group, called "Campaign to Make General Motors Responsible," has submitted nine resolutions to the company's stockholders for consideration at their annual meeting this May.

If General Motors places the resolutions on the proxy statement sent out in April, stockholders-including Harvard and other Ivy colleges-will have a chance to vote on them. If the resolutions are excluded, the group has vowed a "proxy" fight this Spring to corral enough supporters.

In the next two days, the Harvard Young People's Socialist League (YPSL) will send a letter to the Harvard Corporation asking their support of the "Campaign GM" proposals.

The major resolutions would:

enlarge GM's Board of Directors from 24 to 27 seats, adding three representatives of the public. The group's candidates are Betty Furness, President Johnson's special assistant for consumer interests; Rene Dubos, a University of Chicago biologist and environmentalist; and the Rev. Channing Phillips, a civil rights leader in Washington, D. C.;

change the GM charter to restrict the corporation to operations which are not "detrimental to the health, safety, or welfare of the citizens of the United States...";

set up a "shareholder's committee" to study GM's impact on the country, including an assessment of its efforts to produce pollution-free engines and safe cars, its effect on national transportation policy, and, in general, the manner in which it handles its economic power.

Closed Files

Previous studies by Nader have always been blocked by GM's refusal to open its files to the general public.

Harvard owns 287,000 shares of GM common stock, worth between $15 and $20 million dollars. This is one-tenth of one per cent of the total GM common stock.

No Neutral Ground

In submitting the letter, YPSL president John D. Stephens '70 said "We are looking for a response-where Harvard stands on the issue and why they hold that position. The Corporation can't be neutral. They have to vote one way or another-with Nader or against him."

"My off-hand view is that GM has done a good job for the public, the stockholders, and the employees," Bennett said yesterday. "I'd have to see some pretty persuasive evidence to make me vote against the management."

"What we're interested in in GM-for investment, income, and practical value-is a management that is excellent. Just as we want excellence in education, we want excellent investments," he added.

Commenting on the forthcoming YPSL letter, Bennett said "1 only do as treasurer what is in the best interests of Harvard-and that means the students, alumni and faculty."

"We're not easily shaken in our conviction as to what makes a good management by groups that may not have the same motivations that we have," he added.

Sponsors of the letter said they hope the Conporation will respond to the nine proposals after its next meeting. They plan to circulate petitions in the dining halls in support of the "Campaign GM" stockholders.

Although Harvard is only one of GM's 1.4 million shareholders, a researcher for "Campaign GM" said 15 per cent of GM's shareholders are institutions such as universities and the majority of small stockholders do not return their proxies.

Other Ivy Colleges

A check of other Ivy League colleges showed that Yale owns 85,686 shares of GM common stock. Princeton owns 54.007, and Penn owns 34,275 shares.

Columbia has promised to release information on their stock holdings later this week after student pressure caused them to change an old policy of secrecy. The school is reported to own about 40,000 shares. Figures could not be checked at Brown, Cornell, and Dantmouth.

Together, the eight Ivy colleges own more than half a million of GM's 285 million shares of common stock.

"Campaign GM" lawyers believe General Motors is a good company to stage a proxy fight with because the common stock is widely held throughout the country.

At one time, the DuPont family was reported to own about 20 per cent of the shares, but a court order a few years ago forced them to divide much of the stock.

The "Campaign GM" resolutions were submitted to GM in February. The company is now in the process of negotiating with the Securities Exchange Commission to determine which will appear on the GM proxy statement mailed out in April, a GM spokesman said.

The Proxy Process

Every year, General Motors receives several proposals from stockholders concerning corporation policies. After determining what resolutions they wish to include on the annual proxy statement-which is much like the annual Coop ballot-the SEC checks the list to see if any legitimate business proposals have been excluded.

Accompanying the resolutions on the proxy statement, GM management includes a company recommendation along with a 100-word defense of the resolution from its sponsors.

If the "Campaign GM" resolutions are not included on the ballot, the Washington lawyers will probably initiate a proxy fight-asking stockholders to return their ballots to them and not the company.

Compromise Sought

The General Motors management has been reported to be seeking a compromise arrangement with the Washington group which might lead to the nomination of at least one of the three "Campaign GM" candidates to the present 24 member Board of Directors.

If Mrs. Furness and Rev. Phillips are nominated, they will become the first black and the first woman on the Board of Directors.

The Washington lawyers-who own a total of 12 shares of GM stock-do not expect to win the proxy fight. In challenging the management, "Campaign GM" will go after the institutions like Harvard whose constituents can influence the proxy vote, a spokesman said.

First of Severeal

He added that GM was the first of several corporations where proxy fights might be conducted to make the company more responsive to social issues. "We're going after a whole bunch of corporations," he said.

In addition to the three major proposals, "Campaign GM's" program includes resolutions:

requiring GM to develop a car by 1974 that can crash into a wall at 60 m. p. h. with no injury to the occupants. The National Safety Bureau has already designed such a car that works at 47 m. p. h.;

asking the company to meet Health, Education, and Welfare Department anti-pollution standards before the 1975 HEW deadline and to devote more research to study other pollutants in the environment;

asking GM to "substantially increase" the number of non-white new car dealerships. At present, there are seven non-white franchises out of GM's total of 13,000 national dealerships;

improving health and safety standards for GM;

changing GM new car warranties to give more guarantees that the automobile will work.

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