The resolution was submitted by New York City Comptroller William C. Thompson, Jr. on behalf of the New York City Employees' Retirement Fund, or NYCERS, and the Teachers Retirement System, or TRS, and Trillium Asset Management Corp., a socially responsible investment firm.

"We got a letter from [JC Penney] saying that the resolution would appear on the ballot with the company recommending that shareholders vote in support," said Shelley Alpern, assistant vice president of Trillium Asset Management.

"Company endorsements of shareholder proposals are extremely rare," Alpern said. "It's much easier for companies to quietly implement the proposal and ask for a withdrawal. With a public endorsement, J.C. Penney is signaling its shareholders and the public that it has no qualms about this policy from either an ethical or a business perspective."

FedEx Amends Policy

FedEx Corp. (NYSE: FDX) – formerly Federal Express – has agreed to amend its nondiscrimination policy to include sexual orientation.

Ken Scott, portfolio manager at Walden Asset Management, said conversations with FedEx were ongoing for more than two years, in an effort to have the company explicitly include sexual orientation in their written nondiscrimination policy.

"Fedex had generally been a leader on employment issues, so it was an important step, but certainly in line with their regular conditions to upgrade their policy," Scott said.

A shareholder resolution was filed by Walden, Trillium, NorthStar Asset Management, Progressive Investments, ISIS Investments, Domini Social Investments, and NYCERS on Feb. 5.

"By April 4, FedEx called us, committing to change the policy within 150 days, so we withdrew the shareholder proposal," said Scott, who noted the new policy would be in effect before the company's annual meeting around Labor Day, circumventing a need for a vote by shareholders.

"FedEx and J.C. Penney now join a majority of their corporate colleagues in the Fortune 100," said NYCERS' Thompson, which has $27.7 million in holdings in FedEx. The City's five funds have invested $60.6 million in the company.

"This is an important human and labor rights issue, and I am hopeful that this decision will have widespread impact across corporate America," Thompson said. "Everyone has the right to feel safe and secure in the workplace."

"This is welcome news . . . to see these companies recognizing how important it is to protect their employees from discrimination – especially gay and lesbian employees who are not covered by federal law," said Kim I. Mills, education director the Human Rights Campaign, the largest national gay and lesbian advocacy organization.

New York Takes Leadership Role

These were only the latest decisions by companies to embrace nondiscrimination policy changes following resolutions submitted by New York City. Earlier this year, Houston-based Dynegy Inc. of Houston, Texas, American Electric Power of Columbus, Ohio, and the TXU Corp. of Dallas, Texas, all amended their policies in response to New York City's efforts.

The resolutions called for the companies to adopt a policy stating: "Employment discrimination on the basis of sexual orientation diminishes employee morale and productivity.Our company would benefit by a consistent, corporate-wide policy to enhance efforts to prevent discrimination, resolve complaints internally, and ensure a respectful and supportive atmosphere for all employees."

Resolutions submitted by the Comptroller on behalf of the funds are still active with the El Paso Corp., CenterPoint Energy (formerly Reliant Energy), and ExxonMobil Corp.

Last year, ExxonMobil challenged the resolution. The Securities and Exchange Commission ruled that shareholders could vote on the measure. At the corporation's annual meeting in May 2002, in Dallas, more than 1 billion in shares representing $44 billion in holdings were voted in favor of the measure (representing more than double the number of shareholders who supported the measure in 2001). However, the measure did not pass.

In December, the Board of Directors of CBRL Group, Inc., the parent company of Cracker Barrel Old Country Stores, voted unanimously to add sexual orientation to the company's nondiscrimination policy, ending the company's longstanding policy endorsing only "normal heterosexual values." The Board of Trustees had waged a decade-long campaign to prompt a shareholder vote on the measure.

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