The NorthStar: 2nd Quarter, 2007

A Publication of NorthStar Asset Management, Inc.

Warren Buffett Denies Darfur Help

Fifteen thousand Berkshire Hathaway shareholders were already lined up in the rain outside the Qwest Center when NorthStar's Claire DeWitte arrived at 5:30 a.m. for the famed annual shareholder meeting in Omaha, NE. Before the doors opened at 7:00 a.m., the queue swelled to twenty-seven thousand eager shareholders who traveled from around the globe to follow every word of their esteemed CEO Warren Buffett.

Jimmy Buffett (no relation) commenced the annual meeting with an early morning performance of "Berkshire Hathwayville". The crowd roared. At that moment, it became clear: this shareholder meeting was a party, a "lovefest" to celebrate the work of Warren Buffett and Charles Munger. However, NorthStar Asset Management and the Sudan Divestment Taskforce did not travel to Omaha to join in the merriment. We came to talk about the genocide occurring in Darfur.

We believe Mr. Buffett can help stop the genocide in Darfur, Sudan. Here's the connection: 70% of the booming Sudanese oil revenue directly funds its military, the facilitative perpetrators of the Darfur genocide. China National Petroleum (CNPC) whose subsidiary is PetroChina performs the oil pumping. But to say "subsidiary" is to diminish the relationship. The management overlaps are extensive. The two companies are basically one and the same.

Berkshire Hathaway is the second-largest shareholder in PetroChina, directly behind the parent company CNPC which owns 88% of the subsidiary. Warren Buffett is one of the most innovative and emulated business and philanthropic leaders of the last 50 years. It is time for him to use his leadership to ratchet up the economic pressure on PetroChina. But, first, Warren Buffett must acknowledge there is a connection.

"We welcome full discussion of the issue," Warren Buffett told the Associated Press before the meeting. The CEO declared no time limit and he was praised.

Warren Buffett and Charles Munger sat on stage at a standard table drinking endless bottles of Coca Cola, while they wittily answered question after question posed by their adoring shareholders. For seven hours, the CEO and Vice President's brains were picked about corporate profits, the danger of derivatives, MBA School, and various other topics.

But where was the open, limitless discussion of Berkshire Hathaway's holdings in PetroChina? Conveniently, Warren Buffett pushed the controversial discussion to the business section of the meeting. Allotted time: 30 minutes.

During the time designated for Darfur discussion, Warren Buffett allowed only four shareholders to speak, ignoring an official list of shareholders submitted to Berkshire Hathaway. The facts were coherently presented and a higher ethical standard was called for. Mr. Buffett denied the connection between Berkshire Hathaway's investment and the genocide in Darfur. He discredited his influence. In conclusion, he stated it is not Berkshire Hathaway's responsibility, yet he sympathyizes with individuals who are trying to repair the situation in the Sudan.

With Claire next in line to speak, the room went dark and the microphones were off. Discussion over. Shareholders somberly filtered into the lobby. Though we did not receive an admirable response from Warren Buffett, thousands and thousands of shareholders listened to the issue.

NorthStar Asset Management and the Sudan Divestment Taskforce will be back next year to continue the fight.

To learn more, visit sudandivestment.org.

ExxonMobil CEO Pay Derided by Shareholders

Julie Goodridge spoke at ExxonMobil's annual shareholder meeting in May:

Twenty-five years ago, the average CEO compensation package was 42 times higher than the average worker's pay. Now the average CEO makes 411 times more than the average worker. 411 times more.

Last year ExxonMobil gave its former CEO Lee Raymond a lump-sum retirement benefit of $98 million at a time when the Company's employee pension had a $11.2 billion funding deficit.

Due in part to the former CEO's exorbitant compensation, executive compensation in general is under greater scrutiny by the SEC, by Congress, by the media and by shareholders. In fact, Mr. Raymond's pay package was held as a deplorable example by Representative Barney Frank (D-MA) when the House bill requiring public companies to give shareholders an annual nonbinding vote on executive compensation was passed by the House. Senator Barack Obama (D-Ill.) introduced a companion bill in the Senate.

New SEC rules aim to uncover the full extent of executives compensation. Exxon's proxy statement reports Mr. Tillerson, in his first year as our CEO, took home just over $13 million. However, if we calculate Mr. Tillerson's compensation using the new rules we find that Mr. Tillerson's actual compensation is $9 million more, over $22 million.

We believe the historically high executive compensation level of ExxonMobil diminishes shareholder value. NorthStar's resolution asked shareholders to question why it takes the Company's lowest paid employee a full year to earn what Mr. Tillerson earns for an hour on the job.

We ask ExxonMobil to examine the significant gap between the lowest paid worker and the highest paid worker because we believe it is fiscally irresponsible for a company to put so much of its resources into a single individual.

We asked for a justification of this gap at a time in our history when it takes an Exxon employee earning minimum wage a full day's pay to fill her car with gas at one of our Company's pumps.

We believe that reinvesting ExxonMobil's history-making profits of 2006 in all of ExxonMobil's employees - from the line workers to administrative assistants to management - will increase shareholder value by strengthening employee morale and protecting us from declining value when times are less favorable.

Mr. Raymond's retirement package was a rubber stamp on excessive spending. It is our responsibility as shareholders to ask why. We must send the message that high company profits do not justify outrageous CEO pay.

Immigrants Confront Western Union CEO on Mother's Day Gifts

In Mexico, Mother's Day falls on May 10th. It's a day when many Mexican immigrants in the U.S. send some money home to their mothers using Western Union's money wiring services. This year, Mother's Day landed on the day of Western Union's annual meeting in New York City.

Assembled for a mid-day rally prior to the meeting was a diverse crowd of Somalis, Salvadorans and Mexicans, Haitians, Filipinos and Kenyans. They held bright yellow signs parodying the company's tagline of its services, "The fastest way to steal money, worldwide." Francis Calpotura, director of the immigrants rights organization, Transnational Institute for Grassroots Research and Action (TIGRA), explained, "Today, we're putting Western Union and the multibillion-dollar remittance industry on notice. The days of taking advantage of our love [of our families] are numbered."

In the fall of 2006, NorthStar teamed up with TIGRA and Responsible Wealth to file a shareholder resolution with Western Union asking them to report on the fees charged to hard-working people who struggle to earn enough money to send some home to their families across the world. These "remitters" are immigrants to the U.S. who work tirelessly in the hopes of raising the standard of living for family members back home.

The typical user of remittance services is a low wage immigrant worker who lives in urban America, takes home $1000 per month and sends $300 of those earnings to relatives in places like San Salvador, Mexico City and Manila. Fees paid to Western Union to wire this money cost $300 per year, equal to one full month's remittance.

In its glossy annual report to shareholders, Western Union shows a picture of a happy family with the following quote, "It's important for me to provide for my family back home. With Western Union, I can be there for them." Imagine how genuine their smiles would be if the money this family received had not been reduced by the 10% transaction fee, and by the 2.5% exchange rate commission, and by the 1.5% interest rate earned by Western Union on each transaction.

According to the Transnational Institute for Grassroots Research and Action (TIGRA), if Western Union and other companies reduced their transmittal fees by 10%, an additional $8-10 billion would reach families in developing countries each year.

Will Western Union suffer if its predatory fee structure is reduced to more a reasonable level? The Multilateral Investment Fund of the Inter-American Development Bank has estimated that funds wired from the United States to Latin America alone will be 51% higher than they were just two years ago. Even with a reduction in fees, Western Union will profit from the dramatic rise in money wired abroad. In fact, the sheer volume of these transactions is reason enough for a discounted rate to remitters.

It costs Western Union an average of $4.25 to wire money to families in the Global South, and yet it charges customers five times that amount. Decreasing remittance costs by 10% has the potential to lift 33 million people above the global poverty threshold in developing countries.

Following the rally, the crowd of over 100 people made its way to Western Union's meeting where a Mother's Day card was presented to the Company's CEO Christina Gold. Afterward, one organizer, Artemio Guerro wondered, "Where does Gold think her $16 million income comes from anyway? She's lining her pockets with the money earned by Mexican dishwashers, Chinese construction workers and Jamaican childcare providers. The least she can do is show some gratitude and put a small portion of the profits back into their communities."

NorthStar believes that Western Union has a moral obligation to its customers to sign on to the Transnational Community Benefits Agreement, to put an end to hidden transaction costs, and to make a commitment to its client base to offer its services at a reasonable cost.

While the SEC disallowed NorthStar's resolution, we continue to engage with McGraw Hill. To learn more about the Transnational Community Benefits Agreement and TIGRA, go to transnationalaction.org

Bumping the Glass Ceiling: Bopping with Wal-Mart

"In the company of American Idols" is not how one would describe the typical share-holder meeting. Yet, Larry Brown, a research assistant at Responsible Wealth in Boston, found himself speaking to Idols and a handful of shareholders at Wal-Mart's meeting, when he brought NorthStar's resolution addressing the fairness of Wal-Mart's stock option distribution policies.

Wal-Mart's shareholder meeting was not the gray-suited, buttoned up business affair most annual gatherings conjure up. Rather, it was a highly produced pep rally replete with "Idol" winner Jordan Sparks, and comedian Sinbad as emcee. Needless to say, the business portion of the event, where NorthStar's resolution was brought to the attention of the assembled shareholders and over 20,000 Wal-Mart associates, ended up being everyone's "bathroom break."

Undeterred, Larry began his remarks:

Wal-Mart has made a public commitment to building a diverse workforce. However Wal-Mart's own employment policies and compensation structure continues to attract considerable scrutiny and criticism, damaging the reputation of the company and increasing the company's exposure to potential liabilities.

We, as shareholders, challenge the Board to recognize the overwhelming income and asset divide standing between its executive officers and non-executive work force, particularly those who are female and of color. As it stands, the typical Wal-Mart associate isn't eligible or cannot afford to purchase an equity stake within the company. Women and minorities are disproportionately employed in hourly positions, as opposed to salaried jobs, though female and minority associates comprise 60% and 30% of Wal-Mart's total workforce, respectively.

We believe workplace diversity and workplace equity are two values which go hand in hand. Board-level committees decide to concentrate the distribution of stock options amongst a limited circle of the company's executives, to the detriment of Wal-Mart shareholders and non-executive Wal-Mart associates alike. This glass ceiling on equity ownership restricts associates from sharing in the wealth created by the company's market value.

The wealth generated from exercising stock options enables employees to fund family members' education, make a down payment on a house, provide for retirement or establish a reserve pool for emergencies. Simply put, these are benefits the company has generously provided the executive officers of the company. We call on the Board to maintain the legacy of Sam Walton's concern for the welfare of the company's associates. If Wal-Mart is to change, it must change from the inside, beginning at the top.

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Written and edited by Margaret Covert, Claire DeWitte and Julie Goodridge

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