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The Shareholder Forum™
Purpose
The Shareholder Forum provides all decision-makers –
from the
ultimate owners of capital to the corporate managers who use their
capital, and all of the professionals in between
– with reliably
effective access to the information and views participants consider
relevant to their respective responsibilities for the common objective
of using capital to produce goods and services.
Having pioneered what became
the widespread practice of "corporate access" events over two decades
ago, the Forum continues to refine its "Direct
Access" practices to assure effective support of marketplace
interests.
Access Policies
To provide the required investor access without regulatory constraints,
the Forum developed policies and practices allowing it to function as an
SEC-defined independent moderator. We also adopted well-established
publishing standards to assure essential participant privacy and
communication rights.
These carefully defined and thoroughly tested
Forum policies are the foundation of our unique marketplace resource
for clearly fair access to information and exchanges of views.
History
We have been doing this for more than two decades. The Forum programs
were initiated in 1999 by the CFA
Society New York (at the time known as 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 the Society’s members.
Independently supported by Mr. Lutin since 2001, the Forum’s public
programs – often in collaboration with the CFA Society as well as with
other educational institutions such as the Columbia Schools of Business
and Journalism, the Yale School of Management and The Conference Board –
have achieved wide recognition for their effective definition of both
company-specific and marketplace issues, followed by an 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.
Commitment
The Forum welcomes suggestions for its continuing support of fair access
to the information needed by both shareholders and corporate managers.
Responding to the recent increases in investor engagement and activism,
we have established a strong policy commitment to supporting corporate
managers who wish to provide the leadership expected of them by assuring
orderly reviews of issues. We will of course also continue to welcome
the initiation of company-specific programs by shareholders concerned
with the use of their capital to produce goods and services, and we
naturally remain committed to addressing general marketplace interests
in collaboration with educational institutions and publishers. |
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For
other reports and views relating to recent SEC initiative encouraging shareholder
communications, see
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Compliance Week, January 15, 2008 article
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A
Weekly Newsletter On Corporate Governance, Risk And Compliance
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| Shareholder
e-Forums: Useful Tool or Pitfall?
By Louis M. Thompson, Jr., Compliance Week Columnist — January
15, 2008
 ou
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.
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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
 Click
Here for Other CW Columns by Louis Thompson Jr.
Related Coverage
Mandatory
e-Proxies Set To Become Reality (July
3, 2007)
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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
company-sponsored e-forums.
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
difficult.
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
practices.”
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:
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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
access proposals.)
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
company.
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. |
© 2008
Haymarket Media, Inc.
All Rights Reserved. "Compliance Week" is a registered mark of
Haymarket Media, Inc.
Compliance Week provides general information only and does not
constitute legal or financial guidance or advice.
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