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Shareholder Proposal Concerning
Indemnification of Directors in Derivative Lawsuit
(December 14, 2004)
Copied below is a shareholder proposal with an accompanying
supporting statement submitted to Crowley Maritime Corporation on December 14,
2004 by James A. Smith, the founder and managing partner of
Miramar Partners, a San
Francisco-based private investment and special situation fund.
The proposal was submitted pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, for
inclusion in the company's proxy statement for the next meeting of stockholders.
The proposed resolution is for a shareholder
determination that the company's directors did not meet the standards of conduct
required for corporate indemnification in relation to claims asserted in a
"Derivative Lawsuit" which had been recently reported:
The proposal's referenced provisions relating to
indemnification are in
section 145 of the
Delaware General Corporation Law ("DCGL"). DCGL
subsection 145(d)(4) states that shareholders can make the determination about
whether a director "has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section" in relation to a specific case. The
stated requirement for indemnification under subsections 145(a) and (b) is that
"the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation."
It should be noted that shareholder adoption of this
resolution would not prevent a director's indemnification under other provisions
of DGCL 145, which allow corporate indemnification to the extent that a director
succeeds in the defense of claims or that a court orders it. Some or all of a
director's costs may also be covered by insurance policies, independently of
corporate indemnification rights.
In any event, the proposed shareholder determination of
director conduct would apply only to the claims in the recently initiated
Derivative Lawsuit, and would not apply to the company's indemnification of
directors in relation to any other case.
[Note: The proposal was subsequently withdrawn
in a March 11, 2005 letter stating that recent
developments would make it inappropriate for Mr. Smith to present the resolution
to shareholders.]
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PROPOSAL: INDEMNIFICATION OF DIRECTORS
RESOLVED, that in relation to the claims asserted against each of the
directors of Crowley Maritime Corporation (the “Company”) in a lawsuit
commenced by stockholders on behalf of the Company and described in a
complaint filed with the SEC in a November 30, 2004 Form 13D report
(“Derivative Lawsuit), based on the reports approved by those directors
stating that they knowingly took actions to benefit the Company’s
controlling stockholder at the expense of all other stockholders, the
Company’s stockholders have determined pursuant to Delaware General
Corporation Law (“DGCL”) Section 145(d)(4) that the defendant directors
listed below have NOT met the applicable standards of conduct required for
indemnification in DGCL 145(a) and 145(b); and
FURTHER RESOLVED, that having determined that each of the listed directors
had NOT acted “in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation” as
required by DGCL 145(a) and 145(b), the Company may not indemnify these
persons in relation to the claims asserted in the Derivative Lawsuit except
to the extent that each succeeds in defense of those claims or that
indemnification is permitted by other provisions of DGCL 145:
Philip E. Bowles
Molly M. Crowley
Thomas B. Crowley, Jr.
Gary L. Depolo
Earl T. Kivett
William A. Pennella
Leland S. Prussia
Cameron W. Wolfe, Jr.
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SUPPORTING STATEMENT
All shareholders, especially minority
shareholders, entrust directors to run a company in the best interests of
all the shareholders. When directors fail in this capacity and favor one
group of shareholders over another at the expense of the very minority
shareholders they are supposed to protect, I believe they must be held
directly accountable for their actions, or lack thereof.
The claims in the November 30, 2004
Derivative Lawsuit are based on statements in publicly filed SEC reports
that were approved by each of the defendant directors. The Lawsuit’s
complaint and all of the referenced reports are available on the SEC’s web
site (www.sec.gov)
for any shareholder to examine, so that you can make an informed judgment
about each director’s conduct.
For example, you will find that each
director signed a March 19, 2004 SEC Form 10K report admitting multimillion
dollar expenditures of corporate funds for split dollar life insurance to
“enable Mr. Crowley and his family to retain ownership of shares and control
of the Company under circumstances when certain of such shares otherwise
might have to be sold to a third party to pay applicable estate taxes.”
As stated in my proposal, Delaware law
allows us, as shareholders, to make the determination about whether a
director has met the standard of conduct required for corporate
indemnification in a specific case. If you agree with me that the directors
have knowingly acted in breach of their duties to minority shareholders, I
ask you to vote for my proposal so funds of our corporation – shareholder
property – will not be used to indemnify the directors from their
accountability to us.
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