SPILL washes up on BAX AGM

Headquartered in Deerfield, a northern suburb of Chicago, Baxter International (BAX), held its annual shareholder meeting at its corporate campus earlier this month.  Since taking the reins as chairman, president and CEO in January of 2016, José Almeida has responded to investor dissatisfaction with the hospital and renal products maker's stagnating revenues by streamlining operations including significant employee layoffs.  Since he took the helm, BAX common has increased over 47%, compared to 30% for the S&P Healthcare Equipment Index and 17% for the S&P 500 Index.

So it was not investment or employment concerns that prompted the neighbors of the company's R&D and manufacturing facilities a few suburbs over to take their 15-year-old dispute with the company to its shareholders attending the AGM.  Stop Pollution in Long Lake, or SPILL, picketed to protest alleged pollution of the lake near Baxter operations and its unknown effects on wildlife.

"We want to see a signed sewer connection agreement," said SPILL spokeswoman Paige Fitton, who owns property on the lake.  She said homeowners near the lake converted from septic systems to the sewer system decades ago to help protect the lake, and Baxter should have followed suit.  Currently, "[w]e are actively working with local and regional agencies...to secure the necessary approvals for Baxter to begin construction of the connection to the public wastewater system," said Baxter spokesman William Rader.  "In fact, we have meetings scheduled in the next few weeks that should substantially advance this process. We appreciate the opportunity to work with the agencies to secure the required permits as soon as possible."

The company is in compliance with the law, but some residents near the lake "don't like the fact that we do discharge the clean water into the lake," Mr. Almeida said in response to a shareholder's question at the AGM about the protesters.  However, the Illinois EPA issued a violation notice to Baxter last August and since then has been working with the company on an agreement to resolve the violations, such as exceeding its discharge permit for biochemical oxygen demand, or the amount of dissolved oxygen that must be in the water so microorganisms can decompose the organic matter, and for total suspended solids, or particles trapped by a filter and used as a guide on the wastewater's quality after treatment in a wastewater treatment plant.

In January, although the company could not provide a timeline when either the agreement with the IEPA or the connection to the sewer system would be operative, a spokesman said it invested about $1 million in treatment plant improvements and remained committed to resolving the issues.  "We are hopeful they mean it and are going to make it happen soon," SPILL representative Fitton said. "They're way overdue."

Besides the environmental variety, another hazard for the publicly-traded company these days seems to be holding its annual shareholder meeting too close to home, where long-simmering grievances can be aired by rowdy local residents.  More companies are following in the footsteps of bank holding company Wells Fargo (WFC).  Since 2012, when loud and raucous demonstrations against the bank disrupted the gathering in San Francisco, the company's meeting hasn't been held in its hometown, but has been on the circuit of cities like Salt Lake City and San Antonio.  The location is disclosed in its annual proxy statement, which becomes public roughly a month in advance of the meeting.

It may not always be possible, however, to keep a step ahead of the disgruntled protestor or activist determined to take matters into his own hands.

Robert Stead