This excerpt taken from the BMY DEF 14A filed Mar 23, 2005.
Shareholders request that our Board review the economic effects of the HIV/AIDS, tuberculosis and malaria pandemics on the companys business strategy, and its initiatives to date, and report to shareholders within six (6) months following the 2005 annual meeting. This report, developed at reasonable costs and omitting proprietary information, will identify the impacts of these pandemics on the company.
We believe that HIV/AIDS, tuberculosis (TB) and Malaria pose major risks to the long-term financial health of firms, like Bristol-Myers Squibb Company that operate in emerging markets.
The crisis of HIV/AIDS in Africa, with half of all global HIV/AIDS cases, is well known. UNAIDSthe joint United Nations AIDS programreports life expectancy in much of southern Africa has declined by over half, to barely thirty years.
New research also shows disturbing trends in Asian markets. New infection rates in Asia are at all-time highs. 7.4 million people there are living with HIV. India alone has more citizens living with HIV than any country, except South Africa. (Report on the Global AIDS Pandemic, UNAIDS 2004).
Foreign Affairs reported in December 2002 that even moderate HIV pandemics in India and China may reduce per capita GNP by 2005 to virtually 2000 levelswiping out a generations worth of economic growth.
In China, UNAIDS projects 10 million infections by 2010. Stephan Roach, Morgan Stanleys Chief Economist, wrote in June 2004 that all the economic growth in the world cannot possibly compensate for the devastation China would face if [UNAIDS] projections were to come to pass.
Standard Chartered Bank Group Chief Executive Mervyn Davies, in a 2004 world Economic Forum report, cautioned that AIDS imposes a day-to-day economic tax that compromises business productivity. Firms pay in increased health and benefit costs, decreased productivity, higher turnover, and other ways.
Despite these warnings, the same report concluded firms are not particularly active in combating HIV/AIDS and businesses appear to be making decisions based on a patchy assessment of the risks they face.
Unfortunately, most companies do not yet report appropriate data for investors to make informed decisions about the impact of HIV/AIDS, says a 2003 survey of corporations by UNAIDS. We believe, to date, our companys reporting has also been inadequate.
In contrast to our companys performance, several large-cap firms make reporting on infectious diseases best practice. The Bill & Melinda Gates Foundation has funded an HIV/AIDS Resource Document at the Global Reporting Initiative.
In 2004, Coca-Cola shareholders approved a resolution seeking such a report with 98% support. Coca-Colas subsequent report notes the moral and business imperatives are of equal importance in responding to HIV/AIDS.
Our experience with Coca-Cola and other leading companies demonstrates that these reports need not be onerous. In our opinion, shareholders must fully understand the threats posed by these diseases in order to make informed assessments of our companys value.
We urge shareholders to vote FOR this resolution.
Board of Directors Position
The Board of Directors recommends a vote AGAINST the proposal for the following reasons:
The Board of Directors believes that the proposal is unnecessary because we already report extensively on the devastating effects of the HIV/AIDS pandemic and the initiatives we have taken to address this pandemic. We do not make, and have no plans to make, tuberculosis or malaria drugs.
We have been and remain a leader among global pharmaceutical companies and other global corporations in addressing the HIV/AIDS pandemic. Our company is well aware of the human and economic impacts of HIV/AIDS, as demonstrated by our many leading edge programs and initiatives to address the pandemic. In 1999, we launched SECURE THE FUTURE®, an unprecedented, multi-year public-private initiative to help alleviate the HIV/AIDS crisis among women and children affected and infected by HIV/AIDS in sub-Saharan Africa, a region hit hard by the pandemic. We have committed $120 million to this initiative, the first and largest corporate commitment of its kind to fight HIV/AIDS in Africa. In all, more than 170 individual grants for community outreach and education, medical research
and care and capacity building have been awarded in nine countries in southern and West Africa. Through these grants, the initiative is funding a range of sustainable and replicable programs in some of the hardest hit and most resource-constrained areas of the world. The countries are: South Africa, Swaziland, Botswana, Namibia, Lesotho, Senegal, Burkina Faso, Mali and Cote dIvoire. As recently as October 2004, we committed to fund medical centers focused on caring for children with HIV/AIDS in Lesotho and Swaziland. The centers will be modeled on a Childrens Clinical Center of Excellence in Botswana, also funded by a SECURE THE FUTURE® grant.
We are a founding partner of the Accelerating Access Initiative (AAI), an unprecedented public-private collaboration established in May 2000 to help increase access to HIV/AIDS care and treatment in the developing world. Under the initiative, we have worked closely with United Nations agencies and with governments and other partners, in developing and implementing national plans to expand access to sustainable prevention, care and treatment of HIV/AIDS.
Despite the successes to date achieved by these and other best collective efforts, we recognize that more needs to be done to solve the AIDS crisis. Consistent with our companys Pledge to extend and enhance human life, we will continue to explore opportunities to make a meaningful difference.
We have clearly reviewed and are aware of the economic effects of HIV/AIDS on our strategy. We already report extensively to employees, major stakeholders and other constituents, as well as the trade and mainstream media, on the devastating impact of HIV/AIDS, as well as initiatives our company has taken, such as the Global Access and SECURE THE FUTURE® programs. Information on initiatives our company has taken to address the HIV/AIDS pandemic is available at www.bms.com/sr/data. The Board believes that adoption of the proposal would not serve stockholder interests and would be an ineffective use of stockholder funds.
Accordingly, the Board of Directors unanimously recommends a vote AGAINST this proposal.