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Inviting Comments on Simplified Definition of Standards

Encouraged by many Forum participants to simplify the presentation of standards for broader marketplace use, we have developed a list of three essential questions that seem to cover all the elements of fair communication practices we had identified in the longer list during the open meeting last month. Your comments are invited to help us refine this proposed definition of standards.

Three questions to judge fairness of communications

The suggested three questions are presented below with examples of “subsidiary” questions that might be considered as elements of the main questions. You may recognize some of the points raised in these subsidiary questions from our original list, but you’ll also see some new points.  Please let us know if you think any points that need to be included or more clearly addressed. We will also welcome any suggestions to make the presentation more readily usable by a wide range of professional and individual investors.

1.      As viewed by an investor, does the company provide all shareholders a reasonable, fair opportunity to ask management questions relating to the election of directors and other matters to be decided at a shareholder meeting?

Examples of subsidiary questions:

§    Do all shareholders have access to some kind of suitable communication process for presenting questions to management?

§    Does the process provide shareholders with responses in time for consideration in their voting decisions?

§    For matters concerning the qualifications or views of board candidates nominated by management, are shareholder questions presented directly to the nominees?

§    Can a shareholder ask questions about the communication process itself?

2.      As viewed by an investor, does the company provide all shareholders a reasonable, fair opportunity to present their questions or views to management publicly, if they choose to do so, for consideration by other shareholders in their voting decisions?

Examples of subsidiary questions:

§    Does the company provide a process that allows all shareholders to submit questions or views that can be observed by other shareholders?

§    Does the process take place in time for the questions and views to be considered in voting decisions?

§    Are shareholders able to observe all the questions or views that other shareholders choose to present publicly?

§    Does the process assure the integrity of reporting shareholder submissions?

3.      As viewed by an investor, are all shareholders able to reasonably observe any management or director candidate responses to the questions other shareholders choose to present publicly for consideration in their voting decisions?

Examples of subsidiary questions:

§    Does the company respond to shareholder questions publicly, or in a way that can be observed at least by all of the company’s shareholders?

§    If shareholder questions are presented verbally in either physical meetings or electronic communications with a company’s managers or director candidates, does the company provide all shareholders with suitable opportunities to satisfactorily observe the exchange either by participating in the live event or by accessing an archived record?

§    Are all shareholders able to determine whether the company’s managers, or director candidates if appropriate, have responded to a publicly presented shareholder question?

§    Are responses provided in time for shareholder consideration in voting decisions?

§    For questions concerning the communication process, are responses provided in time to guide shareholder efforts to obtain and consider information relevant to their voting decisions?

Completing the definition of standards

As reported three weeks ago, the Forum has initiated two workshop projects to assure effective marketplace testing of both (a) our definition of standards and (b) the functional communication practices to which those standards will be applied. We need two things from you as a Forum participant to make this program as effective as possible:

►         Your comments on the proposed definitions of standards presented above

►         Your two-minute response to the  Forum questionnaire about investor information requirements

The results of this effort will be important to all of us. While defining standards for shareholder communications may seem less interesting to most people than the latest CEO defenestration, the opportunity to shape marketplace practices will certainly prove valuable to those of us whose careers depend on informed investor decisions.

GL – August 24, 2010

 

Gary Lutin, Chairman

Program Panel:

Hye-Won Choi, TIAA-CREF

Margaret M. Foran, Prudential Financial, Inc.

Mary Beth Kissane, Walek & Associates and National Investor Relations Institute (NIRI)

Cary I. Klafter, Intel Corporation

Alvin P. Kressler, III, Bloomberg

James Kristie, Directors & Boards

Eric Nowak, Swiss Finance Institute and European Group for Investor Protection (egip)

David A. Silverman, Blue Harbour Group and New York Society of Security Analysts (NYSSA)

Timothy Smith, Walden Asset Management

Frank G. Zarb, Jr., Katten Muchin Rosenman LLP

 

 

 

This Forum program is open, free of charge, to anyone concerned with investor interests in the development of standards for conducting shareholder meetings with electronic participation. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was encouraged by Walden Asset Management, and is proceeding with the invited leadership support of Broadridge Financial Solutions, Inc. and Intel Corporation to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to e-mtg@shareholderforum.com.

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.

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.