The Shareholder Forum

supporting investor access

for the informed use of capital to produce goods and services


The Shareholder Forum


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.


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.


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.



Exceptions prove rule: Directors' firings are rare

Wednesday, July 18, 2001


Corporate directors are well-trained to recite the noble-sounding mantra that their primary job is to look out for the shareholders' interests, that the investors are really their bosses.

But what if shareholders don't like the job those directors are doing in looking out for their interests? If those directors are really the shareholders' employees or representatives, can they be fired?

Technically, yes.

Realistically, no.

Two recent cases of shareholders actually firing directors are the exceptions that prove just how uncommon, and difficult, it actually is.

Exhibit A: Lone Star Steakhouse & Saloon, a Wichita, Kan.-based Nasdaq-traded company at which a dissident stockholder won election to the board. He did so despite holding just 1,100 shares, and despite the fact that the board member he ousted was Lone Star's chairman and chief executive.

Exhibit B, and closer to home: Willamette Industries, where shareholders voted in a slate of three directors over the incumbent directors, including (again) the company's chief executive.

We media types love to play connect-the-dots to draw a picture of a trend, no matter what bizarre outline we draw when we link them. That won't work in this case, even though there are only two dots, and geometric theory says you ought to be able to draw a line between the two.

One reason is that the circumstances in the two cases are so dissimilar. The Lone Star case involved a longtime critic of the company's weak financial performance and executive raises and bonuses.

The Willamette situation is the result of a hostile takeover bid from Weyerhaeuser Co., which has been unable to get Willamette to negotiate. Weyerhaeuser needs directors sympathetic to its cause to either pressure Willamette to bargain or to defuse a deal-killing poison pill.

Almost no one contends that Willamette's directors have done a bad job in running the company; historically, Willamette has been one of the standouts of the highly cyclical forest products industry. Weyerhaeuser is arguing that shareholders could do even better by joining the companies.

The other reason is that there are only two dots. If anything, they're the exceptional dots that prove the rule of the surrounding universe: Shareholders almost never get to give directors the boot, even those who richly deserve it.

Which is also about the only way shareholders can change the direction of a company in America, adds Robert Monks, a longtime activist on corporate governance issues. Sure, shareholders can submit all the resolutions they want, a cumbersome process that's often ineffectual even if the resolution passes. In Britain, 10 percent of a corporation's shareholders can call a meeting; it's virtually impossible to do so in this country, he says.

American corporate law is designed to protect entrenched management, and nowhere is that better illustrated than in the rules designed to thwart alternative board candidates, Monks says; the expense and regulatory burden is on the challengers (pay for printing and mailing your own proxy materials, navigate the intricacies of the law without running afoul of the Securities and Exchange Commission), while management gets to use the corporate treasury in its defense.

That's why board challenges generally work only "where very big money is committed" -- very big money like Weyerhaeuser, for example. "For an ordinary citizen coming in off the street and saying, 'I want to run for the board,' I have to tell you, that is a loser."

And even if a challenger, big or small, gets on the board, it may not produce the intended results. Weyerhaeuser has just three seats on Willamette's board; unless the remaining Willamette shareholders change their tune, Weyerhaeuser will have to wait a whole year for another election before it can achieve a majority. As one analyst notes, that's exactly why companies stagger board terms; it gives them even more time to wait out the opposition.

Very occasionally, a challenger gets the results he wanted; Monks says that happened to him when he ran for the board of retailer Sears, Roebuck a decade ago. "I just wanted to get enough votes that they couldn't ignore me."

He didn't get elected, but Sears did make changes. Locally, Bellevue's First Mutual Savings Bank settled a multiyear dispute with a group of shareholders who wanted the company put up for sale by putting one of the dissidents on the board; a year later, the company bought out the dissidents' shares, as well as those from other investors who wanted out.

When the corporate ship hits the iceberg, it's the chief executive who is relieved of command. CEOs should be held accountable, but they shouldn't be alone in feeling the pain. Directors who are comfortably coasting to retirement from board service should not be allowed to get away with simply jettisoning their executive hiring mistakes.

Directors frequently enjoy extended board tenure; they ought to be grilled regularly about what they've produced for shareholders during those long stays: Why didn't you recognize the company was adrift? Why didn't you spot the icebergs?

Such close grilling, and the improved performance it might spur, would be good news for the shareholders, big and small, who own the boat.

It would also be good news for the employees down in steerage who, whenever the captain and directors put the vessel onto the rocks, are the ones most likely to be left treading water.

© 1998-2001 Seattle Post-Intelligencer




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