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Christian Brothers Investment Services Cites Major Corporate Governance Victory

Christian Brothers Investment Services Cites Major Corporate Governance Victory

Published 05-16-03

Submitted by Christian Brothers Investment Services, Inc.

NEW YORK, NY - Christian Brothers Investment Services (CBIS), a leading investment management firm serving the Catholic institutional market, helped spearhead a coalition of restive shareholders this past week, demanding improved corporate governance at one of the nation's largest corporations. At Gillette's annual meeting yesterday, 63% of voting shareholders backed a resolution filed by Christian Brothers and other institutional investors calling on the company to "declassify" its board in order to eliminate staggered board terms and elect all directors annually.

"This shareholder vote is another milestone for the corporate governance movement," says Francis Coleman, Vice President and Director of Socially Responsible Investing at CBIS. "Institutional investors are letting companies know in no uncertain terms that they want to see more accountable management, more accountable boards and improved corporate governance at America's largest companies. Increased shareholder vigilance and activism are likely to be permanent features of the American corporate landscape in the aftermath Enron and other Wall Street scandals. Corporate boards and managers better take notice."

The Gillette (NYSE: G) resolution, which CBIS filed together with Walden Asset Management, took aim at the company's "classified" board policy, where staggered board terms allow shareholders to vote on only one-third of the company's directors - who serve three-year terms - each year. According to CBIS and other concerned shareholders, such staggered elections make the board less accountable to shareholders. By contrast, requiring directors to stand for annual election provides shareholders the opportunity to vote on the performance of the entire board each year.

The Gillette resolution was one of nearly 50 filed in 2003 asking companies with "staggered boards" to adopt annual election of directors. CBIS, together with other concerned investors, filed a similar resolution with McDonald's (NYSE: MCD), which was recently withdrawn when the company agreed to evaluate the issue of de-classifying its board. In almost all cases, these resolutions have been opposed by corporate management. Nevertheless, these resolutions continue to receive majority votes. At the recent Avon (NYSE: AVP) annual meeting, 80.5% of voting shareholders were in favor of a declassified board. Meanwhile, Bristol Myers Squibb (NYSE: BMY), Pfizer (NYSE: PFE) and Dow Jones (NYSE: DJ) recently announced that they will abolish staggered terms and begin holding annual election of directors. Several other major companies must still face this issue at upcoming shareholder meetings.

"These votes signal that shareholders are beginning to take their rights and responsibilities more seriously in this post-Enron environment," says Mr. Coleman. "CBIS has always taken an active stance on these sorts of issues. Now we find that institutional investors are increasingly becoming active, because they have seen what can happen to their investments when companies fail to meet appropriate standards of corporate governance, corporate ethics and corporate social responsibility."

Christian Brothers Investment Services (CBIS) manages approximately $3 billion for Catholic organizations seeking to combine faith and finance through the responsible stewardship of Catholic assets. CBIS' combination of premier institutional asset managers, diversified product offerings, and careful risk-control strategies constitutes a unique investment approach for Catholic institutions and their fiduciaries. CBIS strives to integrate faith-based values into the investment process through a disciplined approach to socially responsible investing that includes principled purchasing (stock screens), active ownership strategies (proxy voting, dialogues, and shareholder resolutions) and community investment. The firm contributes a portion of all profits to support the Church's educational and social ministry.

Additional information about CBIS may be obtained by calling (800) 592-8890, or by visiting the firm's web site (www.cbisonline.com).

Christian Brothers Investment Services, Inc.

Christian Brothers Investment Services, Inc.

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