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The special committee of Dell's board of directors was reported to have responded as follows to a press inquiry requesting an explanation of their decision to decline invited leadership:

In a statement sent Friday, the special committee said that the Dell and Silver Lake deal was compelling and that “the buyer group will assume the significant risks and uncertainties facing the business.” The committee added that it had hired an investment bank to “determine if there are alternatives that are superior.”

For the article reporting this response, see

 

For a printable copy of this report and its referenced letter, click here.

 

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,[1] 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,[2] 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.

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:

  • 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?

  • 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?

  • 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

 

 

This Forum program is open, free of charge, to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. 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.

This Forum program was initiated to address issues and objectives defined by participants in the 2010 "E-Meetings" program 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 access@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.