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Forum Report: Fair Investor Access
Progressing with Dell Example of Responsibilities
for
Investor Information
Responding to
last week’s letter inviting their leadership of an independent,
peer-reviewed valuation report for the benefit of shareholders,
the special committee of Dell’s board has informed me that they do not
wish to explore the proposal. They asked no questions and offered no
explanations, so nothing can be reported about their reasons for this
disappointing decision.
We will in
any event continue the new emphasis on Forum support of corporate
management responsibilities to address investor information requirements,
specifically in relation to Dell and generally. While this particular
project will necessarily rely upon the leadership of investors, following
the practices of many past Forum programs, we should continue to encourage
the collaboration of Dell’s management to assure a cost-efficient, timely
delivery of what investors need. My reply to the special committee’s
chairman included the following practical foundation for this
collaboration.
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Your
active participation in the project will of course be welcomed
whether you provide the invited leadership or not. Depending on how
we decide to organize the process, it is likely that we will
encourage your suggestions of candidates for the valuation
engagement as well as for the peer reviews. It is assumed in any
event that you will want to help establish procedures for access to
company information without the administrative and cost burdens of
formal demands for records. |
Regarding
broader issues, Forum participants’ observations of the Dell situation
have focused our attention on some very practical marketplace problems. In
theory, investors should be able to rely upon corporate managers to
provide all the information needed for their sound decisions. Regulators
are supposed to oversee this management responsibility, and investors also
have rights to demand management’s compliance with the rules. Finally,
theory assumes that everyone can rely upon fund managers as fiduciaries to
make all of this work. Reality is naturally more complicated, but we must
respect this theoretical framework in our development of functional
solutions to the concerns we have identified:
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When the proponents of a transaction have access to material
information that is not available to public investors, how can public
investors obtain the information needed to reasonably consider the
proposal without preferential access or the constraints of
confidentiality obligations?
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If
questions are raised about management’s recommendation or opposition
to a proposed transaction, how can public investors be fully informed
before they are required to make decisions about voting and dissenter
rights?
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If
a transaction is presented by a company’s management or other parties
based on current trading prices to address the immediate value
realization interests of short-term investors, how can investors with
interests in long term enterprise value make fully informed decisions?
During the
next week I will be inviting representatives of Dell investor interests to
participate in a workshop to guide this special project, and I will
appreciate suggestions of either perspectives or specific investors that
should be included to assure our consideration of diverse views.
GL –
February 22, 2013
Gary Lutin
Chairman,
The Shareholder Forum
575 Madison
Avenue, New York, New York 10022
Tel:
212-605-0335
Email:
gl@shareholderforum.com
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