The Shareholder Forum

supporting investor interests in the use of their capital to produce goods and services


Purpose & History of Services

The Shareholder Forum

The Shareholder Forum supports investor interests in corporate enterprise value with services that require independence – and that may benefit from the Forum’s network resources and recognition for advocacy of long term investor interests – to assure a definition of relevant issues and fair access to information that can be relied upon by both corporate and investor decision-makers.

The policies that provide a foundation for the Forum’s marketplace functions have been carefully developed and tested to allow any investor to participate in its communications, either anonymously or visibly, without acting in concert. Established originally to accommodate professional fund managers, this independent moderator function has proved to be consistently effective in managing orderly processes of issue definition for rational analysis by fiduciaries who are responsible for informed decisions.

Initiated in 1999 by the CFA Society of New York (at the time known as the New York Society of Security Analysts) with lead investor and former corporate investment banker Gary Lutin as guest chairman to address the professional interests of its members, and independently supported by Mr. Lutin since 2001, Forum programs have achieved wide recognition for their effective definition of important issues and orderly exchange of the information and views needed to resolve them. The Forum's ability to convene all key decision-making constituencies and influence leaders has been applied to subjects ranging from corporate control contests to the establishment of consensus marketplace standards for fair disclosure, and has been relied upon by virtually every major U.S. fund manager and the many other investors who have participated in programs that addressed their interests.

Currently important applications of the Forum’s independent position include the support of corporate managers who wish to provide the leadership expected of them by responding to shareholder engagement as well as activist challenges with orderly reviews of issues relevant to long term investor interests.

Requests for Shareholder Forum consideration of support may be initiated confidentially by any investor or by the subject company, or by the professional advisors to either.  


June 24, 2001

Market Watch: An All-He-Can Eat Feast at a Steakhouse Chain


For the shareholders of Lone Star Steakhouse and Saloon, there has been a lot more more fizzle than sizzle lately. During the biggest bull market in history, the stock of Lone Star, the Wichita restaurant chain, only sank. A shareholder who invested $100 in the stock in December 1995 had $22.08 at the end of 2000. The Standard & Poor's restaurant index rose almost 52 percent during the period.

Despite a sizable stock buyback program, per-share earnings at Lone Star fell 15 percent last year. Its stock, now at $12.89, trades 29 percent below its book value.

One might expect Lone Star management to make nice to its shareholders. Instead, it is poking them in the eye with a cattle prod.

Last year, the company more than tripled the salary and bonus of Jamie B. Coulter, the chairman, to $977,000. Six months ago, Lone Star forged a contract with Mr. Coulter that gives him a payment equal to 2.99 times one year's annual compensation if there is a change in control at the company.

Lone Star has also been a serial repricer of its stock options, most of which are held by its top executives. In 1997, it reduced to $18.25 the price of options that had ranged from $19 to $32.63. Two years later it repriced options of outside directors, and in 2000 it reduced the exercise price on all outstanding options to $8.47. Mr. Coulter holds options covering 2.6 million shares, accounting for 52 percent of his Lone Star holdings.

But even these excesses pale in comparison with the company's over-the-top response to the candidacy of Guy W. Adams, 50, a Lone Star investor of modest means who is running for an open board seat at the company's annual meeting on July 6.

Last February, Mr. Adams, an independent analyst in Los Angeles, filed proxy materials about the board seat. Two months later, Lone Star sued him, contending that because he had filed misleading proxy materials he should be prohibited from voting any proxies. But a judge ruled Friday that Mr. Adams could proceed after correcting two errors.

In pursuing the suit, Lone Star obtained Mr. Adams's bank, brokerage and phone records, combed through court proceedings in his 1999 divorce and sought to depose his landlord.

Hardball tactics are de rigueur in corporate America. But another Lone Star move is unusual: its subpoena and deposition of Ted White, corporate governance director at the California Public Employees' Retirement System, known as Calpers, owner of 372,000 Lone Star shares. Calpers said the company had one of the five worst boards of those in its portfolio. In the deposition, Mr. White said the fund would support Mr. Adams.

Lone Star said deposing Mr. White was necessary to determine whether Mr. Adams, who owns 1,100 shares, was a stalking horse for the investment fund. Mr. White denies this. "Their response to his candidacy was shameful," he said. "It's fairly telling that an entrenched board feels the need to protect itself with intense litigation."

Mr. Adams declined to comment, but said in court filings that the lawsuit looked like an attempt by the company to use litigation to prevent stockholders from being given a choice of candidates for the board seat.

Other investors agree. And the New York Society of Security Analysts' Committee for Corporate Governance is sponsoring a forum on Lone Star, said Gary Lutin, head of Lutin & Company in New York.

A spokesman for Lone Star said it was committed to shareholder value and that it would not reprice options for executives without a stockholder vote. The company is turning around, he said, and the stock, up 34 percent this year, reflects it.

But that climb could also mean that investors think the Lone Star board's days may be numbered. If that perception becomes a reality, it will come not a moment too soon.

Copyright 2001 The New York Times Company





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Publicly open programs of the Shareholder Forum are conducted for free participation of all shareholders of a subject company and any fiduciaries or professionals concerned with their decisions, according to the Forum’s stated "Conditions of Participation." In all cases, each participant is expected to make independent use of information obtained through the Forum, and participation is considered private unless the party specifically authorizes identification.

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Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.