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.



July 20, 2001

Dow Jones Newswires

Proxy Battles Leave CEOs Exiled From Boardroom



NEW YORK -- It's a little like the king of the castle being forced to hand over the keys to the front door.

In what seems to be an emerging trend in investor and corporate activism, shareholders have been yanking chief executives from their board seats.

A couple of weeks ago, the long-awaited tabulation of votes in Willamette Industries Inc.'s (WLL) contested board election gave Pacific Northwest forest products rival-turned-hostile bidder Weyerhaeuser Co.'s (WY) board slate the edge. With the victory, one of the trio of directors forced to relinquish a seat on Willamette's nine-member board was chief executive Duane McDougall.

That announcement was followed by the stunner that shareholder dissident Guy Adams was victorious in his proxy contest at Lone Star Steakhouse & Saloon Inc. (STAR), unseating chairman Jamie B. Coulter, who will continue as CEO at the Wichita, Kansas company.

And just as Willamette and Lone Star are coping with their own boardroom coups, a third company could be forced into the same predicament. The latest in this season of rough-and-tumble proxy contests is now playing out at Computer Associates International Inc. (CA). If Texas billionaire Sam Wyly and his slate prevails at Computer Associate's annual meeting next month, their plan is to divide the company into four business groups with four chief executives, none of who would wear a director's hat.

It's rare for a CEO to be shut out of the board, stripped of the power over major corporate decisions that comes with a director's vote. That the overwhelming majority of companies generally eschew such setups under normal circumstances is a testament to the proposition that running a company without having a say in the boardroom can be problematic, governance experts say.

In its board practices survey of S&P 1500 companies released late last year, the Investor Responsibility Research Center found that virtually every chief executive served on the board.

"From an operational standpoint, it's a very difficult situation," said Carol Bowie, director of corporate governance services at IRRC, which noted in a recent newsletter that in some director contests this season, activists were unsuccessful in vanquishing CEOs, including at Morton's Restaurant Group Inc. (MRG), where chairman and chief executive Allen J. Bernstein and two other incumbent directors held onto their seats.

"The CEO is the top management representative, the person who is going to be conveying management strategy and other information to the board," Bowie said. "It's a situation that doesn't lend itself, I would think, to smooth operations."

   Changes May Cause Adversarial Relationships

Bruce E. Beebe, editor and publisher of Directorship, a corporate governance newsletter, said the unusual structure could result in nudging directors to the sidelines, chilling interactions between board members and the man or woman at the top as well as second-tier managers, those in line for succession.

"You create a we-versus-them situation," said Beebe, whose newsletter is published by the Directorship Search Group, an executive search and governance consulting firm based in New York City and Greenwich, Conn.

The way Sam Wyly sees it, however, independent oversight at the top may be just the thing for Computer Associates. The centerpiece of Wyly's battle to replace the current chief executive and the entire board is his plan to create four business units to "enhance CA's ability to effectively compete, innovate, and provide standard-setting customer service and support."

Some aspects of the plan still need to be ironed out, including whether one of the divisions would be designated as a corporate center or possibly even naming a fifth chief executive as a kind of super CEO. However it plays out, there are no plans for any of the chiefs to sit on the board, though, according to Wyly nominee and associate Stephen Perkins.

Perkins outlined various reasons the drastic move is deemed necessary, including in matters of compensation. The Islandia, N.Y., business software maker has faced intense criticism, not to mention litigation, over its stock-option plans, resulting in a Delaware court ordering three top executives to return options worth more than $500 million dollars and a later settlement that cut the giveback roughly in half.

A chief executive should "be held accountable for his performance, and not influencing some committee about whether to grant stock options to the top few people," said Perkins, a former executive of Sterling Commerce, spun out from Sterling Software Inc., the company that Wyly sold to Computer Associates last year.

In proxy contests, adversaries rarely shrink from attacking a perceived weakness on the other side. Computer Associates, which has filed a lawsuit to stop Wyly's effort, is no different.

"Mr. Wyly says he's born-again good governance, but from our vantage point he still looks dead," said Owen Blicksilver, an advisor to Computer Associates, taking aim at a quote from Wyly in a recent Wall Street Journal article.

"He talks about independent oversight. Having the CEO on the board doesn't preclude independent oversight," Blicksilver said. "What it does is destroy decision-making ability and effective leadership. Under these circumstances, what strong independent-thinking CEO would want this job, without having the interaction with the board of directors?"

   Changes At Willamette Won't 'Make Any Difference'

Notwithstanding any behind-the-scenes turmoil that being on the losing end of a proxy contest might engender, Cathy Dunn, vice president of communications at Willamette was blase about its own chief's board exile.

For one thing, it's not the first time the company has operated in that fashion. Because of management changes, McDougall himself served as chief executive for a year and a half without serving on the board, she said.

"He'll interact with the board, just as he did while a director," said Dunn. "Here, whether he's on the board really has no significance for any of us. He could be running the company and be called chief company runner and it wouldn't make any difference."

As for the pending hostile tender offer, she reiterated the company's stance that the $50 a share bid from Weyerhaeuser is "inadequate" adding that there's nothing about installing three new board members that would change management's mind.

Further, the company has no plans in the works to reinstall McDougall to the board.

That's the right attitude, as far as Charles Elson is concerned. Elson is director of the University of Delaware's corporate governance center who sits on three corporate boards himself.

As one of the victors in a proxy contest at Circon Corp. (CCON) in the late 1990s, Elson and a compatriot won board seats at the chief executive's expense. Then he watched in frustration as the board maneuvered to reinsert the CEO.

"Normally, I believe the chief executive should be on the board," he said. "Where shareholder suffrage bumps up against managerial prerogatives, it's a tough one. If shareholders send a message by not electing the chief executive, I think it's inappropriate to put the CEO back on."

-By Phyllis Plitch, Dow Jones Newswires; 201-938-2357;

URL for this Article:


Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved.




Inquiries, requests to be included in email distribution lists, and suggestions of new Forum subjects may be addressed to

Publicly open programs of the Shareholder Forum are conducted for free participation of all shareholders of a subject company and any fiduciaries or professionals concerned with their decisions, according to the Forum’s stated "Conditions of Participation." In all cases, each participant is expected to make independent use of information obtained through the Forum, and participation is considered private unless the party specifically authorizes identification.

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 had been offering for several years with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.