Purpose & History of Services
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
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 New York Society of Security Analysts with lead
investor and former corporate investment banker
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
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
activist challenges with orderly reviews of issues relevant to long term
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.
Compliance Week, January 15, 2008 article
Weekly Newsletter On Corporate Governance, Risk And Compliance
e-Forums: Useful Tool or Pitfall?
probably overlooked this, but the Securities and Exchange Commission is
trying something new with its latest amendments to federal proxy rules:
encouraging public companies to establish online shareholder forums.
Louis Thompson Jr. is an internationally recognized expert on
corporate governance and disclosure, having served for more than
two decades as president and chief executive officer of the
National Investor Relations Institute until his retirement in
2007. An adviser to the Securities and Exchange Commission and
the New York Stock Exchange, Thompson is currently serving a
second term on the NYSE Individual Investor Advisory Committee.
Prior to joining NIRI, Thompson was assistant White House
press secretary to President Gerald Ford.
A veteran of the U.S. Command in Vietnam and the Office of
the Secretary of Defense, Thompson has held executive
communications positions for a number of organizations,
including the American Enterprise Institute for Public Policy
Research, and the National Association of Home Builders.
A former journalist and news anchor, Thompson remains
chairman of the advisory council for the Greenlee School of
Journalism and Communication at Iowa State University, where he
was the 2001 recipient of the James W. Schwartz Award for
Distinguished Service in Journalism and Communication conferred
by the Greenlee School.
A former member of the Harvard University New Foundations
Working Group on corporate governance, Thompson is a partner
with business consultancy Genesis, based in Denver. He is also a
managing director of Washington, D.C.-based Kalorama Partners,
the advisory firm founded by former SEC Chairman and Compliance
Week Columnist Harvey Pitt.
More From Lou Thompson
Here for Other CW Columns by Louis Thompson Jr.
e-Proxies Set To Become Reality (July
The rule amendments were approved on Nov. 28, 2007, but were quickly
overshadowed by the Commission’s vote on the same day to let companies
block shareholder access to the proxy. The SEC issued its final rule on
proxy access Dec. 6, but as of last week, the Commission still had not
published its final rule for shareholder e-forums. The devil may be in
the details, but we do know in general terms what the SEC’s intentions
for shareholder e-forums were—and given the ever-rising pitch of
shareholder activism, those intentions are worth studying.
In his remarks at the Commission’s Nov. 28 meeting, Chairman
Christopher Cox said: “Today’s action is intended to tap the potential
of technology to help shareholders communicate with one another and
express their concerns to companies in ways that could be more effective
and less expensive.” The rule amendments, he said, were intended to
remove legal concerns, such as the risk that discussion in an online
forum might be viewed as a proxy solicitation that might deter
shareholders and companies from using this new technology.
The latter was a concern that corporate commentators expressed when
the rules were proposed. Whether this new exception (and the amendment
that exempts a company or anyone else who creates or operates an
electronic shareholder forum from legal liability for statements made by
others) is sufficient enough to encourage companies to establish an
e-forum remains to be seen. Company officials participating in an
e-forum must take caution to avoid violating Regulation Fair Disclosure.
Now, some electronic shareholder forums, such as the Motley Fool and
Yahoo, already exist. Shareholders today use these forums to communicate
with one another all the time. What is missing, however, is company
input into this process. In previous columns related to the proxy
process, I’ve encouraged companies to use their Web sites and other
means to communicate directly with their shareholders regarding the
company’s position on proxy issues, particularly those that are
contested. But these means are largely a one-way street. The “e-forums”
would provide a two-way street for communication between the
company and its shareholders, and among shareholders themselves. And the
activist pension funds were among the strongest supporters for
I did some preliminary checks with investor relations officers,
corporate secretaries, and governance professionals, and most were not
aware of the new rule. Those who were said they planned to monitor the
other forums just as they do with the blogs, but none said their company
planned to initiate its own shareholder e-forum. I sense there is a
concern that activist shareholders could use a company-sponsored forum
to organize a campaign to gain majority support on issues such as
executive compensation, majority voting for directors, “withhold” votes
for specific directors, and other hot proxy issues. Even on non-binding
issues, in today’s environment, ignoring a majority vote can be
I suspect that some companies might be willing to communicate the
company position on specific proxy issues through their Web sites or
direct communications with shareholders. The sort of open-ended debate
possible through an electronic forum, however, is another matter
altogether. Commissioner Paul Atkins noted that the SEC defines the term
“solicitation” quite broadly, and “…as a result, [we] extend the proxy
rules to any person who seeks to influence the voting of proxies,
regardless of whether the person is seeking authorization to act as a
proxy.” Consequently, Atkins expects the staff to monitor the
development and use of shareholder e-forums for any “potentially abusive
So, could such a forum become a devil’s playground? One should read
or re-read the Compliance Week
interview in the July 17, 2007, issue with shareholder activist Eric
Jackson, chief executive of Jackson Leadership Systems. As an
individual investor, Jackson used his blog and videos posted on YouTube
to band together some 100 shareholders with a combined $60 million stake
in Yahoo. They led a campaign that resulted in a 33 percent “against”
vote for seven of the 10 Yahoo directors at the company’s June 19 annual
meeting. CEO Terry Semel quickly became Yahoo’s former CEO.
Just like what we are observing in the presidential election process,
electronic forums are now playing a key role in engaging activist
participants in Corporate America. It’s time to recognize the power of
the Internet and learn to engage it and manage it the best we can.
So, what should companies consider with respect to shareholder
e-forums? A few points:
Clearly, one should monitor
the existing e-forums to know which shareholders are active, what they
are saying, and what they are advocating.
This information should be
provided in reports to senior management and the board, summarizing
what is being said on key issues, who the key players are, and whether
the company should respond.
Under the theory of “keep
your friends close and your enemies closer,” you may want to consider
creating a shareholder e-forum to have a better handle on what’s going
on among your activist shareholders.
The 2008 proxy season is
likely to be even more active and contentious than last year,
particularly those shareholder proposals focusing on executive pay and
“vote no” campaigns for certain directors. (And the focus on director
elections is partly inspired by the SEC’s decision to exclude proxy
Companies might even derive
some benefit by demonstrating that they take the initiative and want
to hear investors’ ideas and engage in a discussion of what is best
for the long-term future of the company and its shareholders.
The e-forum can also be a
way to expose those who are acting in their own short-term interests
and anticipated profits, as opposed to acting in what should be the
long-term interests of shareholders and the future viability of the
While the dominant users of
a company sponsored shareholder e-forum might likely be the activist
institutional investors, it would also give individual investors a way
to better understand the company’s position on proxy issues and the
ability to use the forum to express their views.
On balance, it seems prudent for companies to consider the pros and
cons of establishing their own shareholder e-forums and be leaders—not
just reactionaries—in the shareholder democracy movement by showing
their willingness to engage in an open discussion of what’s in the best
long-term interest of the corporation and its shareholders.
Haymarket Media, Inc.
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