For Starters; “Svedes – Get Set To Chase Dem Drunk Norvegians Trew De Veeds!”
We hope you’ll forgive our half-Swedish-descended editor for starting off with an offbeat sub-head, which, we hope, will snap you to attention. But the old Norwegian taunt, “Fifty Svedes vent running trew de veeds to catch vun drunk Norvegian” really seems to sum up job-one – at least for the six companies that are on the receiving end of shareholder access proposals from Norway’s Sovereign Wealth fund.
It’s no exaggeration to say the Norwegian funds are “well oiled” – thanks to the $98 billion of petroleum revenues they have in the U.S. stock market – and spoilin’ for a fight – exactly as we predicted they’d ultimately be…way back in our 4th Q 2007 issue, when we singled them out as the likeliest and stubbornest fight-pickers on the scene. We are also betting big that the Norwegians will have lots of big, strong allies from the U.S. Council of Institutional Investors – looking to “send a message” in favor of proxy access – and a strong reminder about their clout.
Executives at the unlucky six Norwegian picks – CME Group, Pioneer Natural Resources, Charles Schwab, Staples, Well Fargo and Western Union Co. will really have to scramble to fend these folks off, and may well stumble and fall in the weeds come the end.
But how about this next development as an early wake-up call?
WILL ONE HUNDRED SMALL INVESTORS WITH FEWER THAN 70 SHARES APIECE BE ABLE TO MEET UP ON THE WEB AND NOMINATE DIRECTORS BY 2013 – SIMPLY TO STIR THE POT?
If gadfly Ken Steiner has his way – and we bet that ultimately he will – the answer is a resounding YES. He’s filed five shareholder proposals to date that would let any investor with 1% of the outstanding shares – OR – 100 people who have at least $2,000 worth of stock each (about 66.6 shares of a $30 stock apiece) band together to nominate directors. Could they do this over the web in 2013 if the proposals fly? Easily, we say. Can they round up candidates who’d agree to be nominated? A snap these days. We’d have to bet that, crazy as it may sound, any of the gadflies that currently support, or run, or blog the loudest on the increasingly aggressive populist websites would pass muster with their web-addicted aficionados, so yes, there would be plenty of “popularly nominated candidates” to run against the companies’ own. Could any of them actually get elected? We wouldn’t rule it out for a second.
So corporate execs at Bank of America, Ferro, MEMC Electronic Materials, Sprint-Nextel and Textron – and maybe more companies still to come – will also have to run through the weeds like mad to fend Steiner off this season.
The real problem for public companies – and one we warned about for over five years – is getting what they wished for in terms of “private ordering” vs. an SEC-brokered, and much more reasonable threshold of say a 3-5% ownership requirement – which was basically in the bag until the Chamber of Commerce bumbled into the fray.
The saddest part of all this – if the gadflies and webworms take over, as indeed they could – it will serve to trivialize rather than improve the director election process in our opinion: It will be interesting to see how many companies try to float their own proposals instead – or in addition to shareholder proposals – and to see how they fare, so stay tuned.
EXPECT SAYS ON PAY TO BE FAR FROM THE SLAM DUNKS THAT MOST COMPANIES RACKED UP LAST YEAR:
Institutional investors are already ticked off that most “says” were rubber-stamped decisions last year…akin to the mostly meaningless ratification of auditors. And of course, the ISSes and Glass Lewises of the world can’t make a living by issuing mostly free passes. Plus – in case you haven’t noticed – there is an awful lot of pay awarded that does not seem tightly tied to actual performance, and the analytical tools to spot the outliers are improving every day…Plus – the real “frosting” on the pay-cake – ordinary citizens ARE increasingly concerned about the huge gap between executive pay and ordinary-citizens’ pay…Plus… it’s a Presidential election year, where this subject is getting daily attention in the debates.
AN INTERESTING POINT TO PONDER FROM POLITICAL POLSTER JOHN ZOGBY…
Zogby warned directors at the 2011 NACD Board Leadership Conference to be aware of a new generation – the “global citizens” – a generation that communicates and identifies themselves in a far different manner than their baby boomer predecessors. We already see this having an impact on annual meetings on the social and environmental fronts…and this year, we predict, on pay issues too.
ON A RELATED FRONT, WATCH FOR THE 99-PERCENTERS AND THE “OCCUPY” FOLKS TO STEP UP THEIR ACTIVITIES AT ANNUAL MEETINGS THIS YEAR:
We hope this won’t happen at YOUR meeting, dear readers, but you’d be nuts, we say, not to step up your own crowd-control procedures – AND to buff-up your image, and your own messages as best you can before Meeting Season kicks in full-blast…
AND SPEAKING OF SENDING MESSAGES; BE SURE TO ALLOW EXTRA TIME FOR YOUR MESSAGES TO ARRIVE THIS YEAR – AND FOR RESPONSES TO COME BACK:
With or without the proposed cutbacks in postal distribution centers, local POs, and six-day per week deliveries, mailed items are taking longer than ever to arrive at their destinations now – and things are likely to get much worse. The latest word from the USPS is that the planned closings of 252 mail processing centers will begin in March. So be sure to build this into your printing and mailing schedules this year.
A TOTALLY PRACTICAL PRE- MEETING PRACTICE TIP: “INSIST ON THE LIST”…AND MAKE SURE IT’S A CERTIFIED ONE:
Yes, we’ve been warning for two years about this too: More and more companies show up at the meeting site each year without a certified list of shareholders. Part of the problem is due to TAs, and issuer staff too, who seem to have lost a lot of corporate memory as to what IS required at a shareholder meeting. And some seems to be due to pure spite – when the TA loses the tabulating job to another provider, and “forgets” to send a certified list unless specifically asked to do so.
“What’s the problem here?” a reader called to ask. “I can’t find anything in the SEC regs that require the presence of a certified shareholder list – or an uncertified one either, for that matter.” Reason-one is that every state we know about has this provision in their model business code – entitling attendees to have a look if they want one. Second, you may not want to admit people to the meeting who are not shareholders, so you need a reliable list for yourselves. Third, the list MUST be certified, since model business codes typically charge the Inspector of Election with “determining the voting power present at the meeting and entitled to vote on each matter” – and he or she can’t do that unless the list is certified by the transfer agent as being “complete and accurate.”
THE BOTTOM LINE: PROCESS AND PROCEDURAL ISSUES WILL BE MUCH MORE UNDER THE SPOTLIGHT THIS YEAR THAT EVER BEFORE, WE PREDICT…SO BRUSH UP YOUR GAME NOW – WHILE YOU HAVE THE TIME TO DO SO…
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