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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 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 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.

 

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Directors & Boards E-Briefing, February 2008 editorial

 

 
Volume 5, Number 2 • February 2008


Who Knows Best?

Here is what you might ask yourself — in a quiet moment of soulful reflection — when an investor questions your strategy.



Back in 1999, when the old AT&T Corp. was a huge operation and growing even more expansive (with cable acquisitions) under then-CEO Mike Armstrong, I asked him this question in an interview for a Directors & Boards cover story: “Can companies grow so large and complex that they could become almost unmanageable?”

That question bothered me then in analyzing AT&T, and bothers me today in analyzing Citigroup and other companies that seem to be unwieldy in size and scope.

Mr. Armstrong gave me a reasoned answer: “Yes, that could become a problem. Not so much due to size, although that is one element of the complexity. It is when companies lose their focus, when they try to be more things than they truly can be, that it is a risk … Manageability is more parallel to focus than it is just to size.”

Fair enough. But still, looking at Citigroup et al, the question nags: Can a company become too big and complex for any one individual to lead — and for a board to oversee? (I’ve been joined in this question by the Wall Street Journal, which critiqued Citigroup in an editorial in January titled “Too Big to Succeed?” — a play on the “too big to fail” philosophy of the domestic banking system regulators.)

Investors who have advocated the breakup of Citigroup over the past few years may have been more right than have the successive CEOs and board members in recognizing the unmanageability — and “ungovernability” — of this behemoth.
 
It’s not heresy to think that investors may actually know more than the board about the company, its industry, and, crucially, its likely destiny. Outsiders haven’t “drunk the Kool Aid.” They are not steeped in the “group think” that comes from seeing the world from inside the corporate walls.

Here from a Reuters report last month on former SEC Chairman Richard Breeden’s activist initiatives:

“Large stockholders … can have vastly more resources to analyze corporate strategies than a part-time board member without an investment staff. ‘I can put eight MBAs on studying a company’s problems,’ said Breeden.”

In a note last month to clients and colleagues, top PR counselor Davia Temin recounts this exchange: “An older corporate board member once said to me, ‘Do you know when we directors know it is time to step down? When the things we believe to be undeniably, incontrovertibly true — aren’t any more.’ ”

If an activist shows up on your doorstep this year, ask yourself: Could this investor be better at seeing around corners for our company and its destiny than we as a management team and board are doing? Are the things we believe about our company, its capabilities, and its place in the universe incontrovertibly true — or maybe not?

And it shouldn’t take an activist knocking on the boardroom door. Take the initiative to get involved in a shareholder forum, like the kind investment banker Gary Lutin organizes and that the SEC is now encouraging, to test your incontrovertible theories about your business.

As a postscript, the circa 1999 AT&T that Mike Armstrong and I talked about was soon thereafter to be no more. It was restructured and acquired. Mr. Armstrong, no longer running the new AT&T but continuing now as then to serve as a board member of Citigroup, is likely confronting the question I asked him nine years ago: “Can companies grow so large and complex that they could become almost unmanageable?”
 

Jim Kristie is the editor and associate publisher of  Directors & Boards.

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Directors & Boards e-Briefing is a monthly service of Directors & Boards. All contents copyright 2008, MLR Holdings LLC.

 

 

 

 

Inquiries, requests to be included in email distribution lists, and suggestions of new Forum subjects may be addressed to inquiry@shareholderforum.com.

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.

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

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