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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.


Forum Report: Protecting Fair Markets

(June 18, 2001)

(includes June 15, 2001 IRRC Corporate Governance Highlights, "Company Grills Dissident in Court Papers")

From: Gary Lutin
To: Distribution: Lone Star shareholders
Sent: Monday, June 18, 2001 12:09 PM
Subject: Protecting fair markets

What do you want to know about someone who offers to represent your interests on Lone Star's board?
After years of widespread investor and media criticism of Lone Star's repeated option repricings, related party transactions, and other conduct raising concerns about the existing directors' respect for shareholder interests, an insurgent candidate has finally been encouraged by prospects of investment community goodwill to run against Lone Star's CEO for an open position on the company's board of directors.  It's now up to shareholders to show how they will deal with their rights and responsibilities.
Presumably, Lone Star shareholders would want to focus their attention on two questions:
  • First, have the existing directors demonstrated that they can be relied on to serve shareholders, or would investors benefit from the addition of a new board member to look after their interests?
  • Second, is the insurgent candidate qualified to represent shareholder interests?
But these are not the issues being addressed, at least so far.  Lone Star's management has initiated a lawsuit to block the insurgent's communications with shareholders, and has used the litigation's subpoena and deposition processes to discourage any shareholder involvement.  Management has then used its uncontested voice to focus attention on issues which, even if genuine, have no real relevance to the questions shareholders must consider.
For example, I am ashamed to admit that I responded reflexively to the IRRC article copied below by seeking explanations of "facts" revealed by management about the insurgent candidate's filings in divorce proceedings.  (If anyone cares, management's spin was inconsistent with the actual record of a reportedly amicable divorce.)  It was only in the course of reading through the hundreds of pages of litigation documents that I came across the deposition records of CalPERS's representative, not mentioned in management's motion arguments, describing the rigorous due diligence conducted by an experienced activist investor to investigate the insurgent candidate's qualifications before deciding to vote for him.
When the insurgent candidate's attorneys file their responding litigation papers due this Wednesday, I hope the focus of interest will be on the real shareholder issues rather than on management's arguments to deprive shareholders of their rights to consider those issues.
Dirty tricks and smear campaigns have not been good for politics.  Let's keep them out of the capital markets.
                    GL - 6/18/01

Corporate Governance Highlights



Vol. 12, No. 24      

June 15, 2001


Company Grills Dissident

 in Court Papers 

BOTH SIDES STAKE OUT THEIR CLAIMS IN BITTER LEGAL BATTLE. The proxy fight that dissident Guy Adams launched at Lone Star Steakhouse & Saloon really is beginning to sizzle. (See Highlights, May 25, 2001.) In addition to a lawsuit that the company already has initiated against Adams, Lone Star filed a motion June 11 seeking a preliminary injunction against him. With the injunction, the company is hoping to stop Adams, and those who it claims are acting with him, from proceeding with a battle to unseat Lone Star Chairman and CEO Jamie Coulter.

The company claims in its suit that Adams’ proxy solicitation materials violate federal securities laws (1) by failing to disclose the existence of participants that Lone Star says are “unlawfully financing and supporting his efforts”; (2) by falsely stating the financial consequences to Lone Star of certain employment agreements between Lone Star and members of its management; and (3) by making misleading statements regarding alleged support that he has received from shareholders of Lone Star.

The company notes that Adams said in his original SEC filings that he is prepared to spend approximately $30,000 on a proxy solicitation and devote many weeks to the solicitation process. “This dubious contention is clearly false in light of public filings by defendant Adams which demonstrate that he is virtually insolvent,” says the company in its complaint. To prove that he does not have the resources to launch such a battle, Lone Star obtained court filings from Adam’s recent divorce proceedings. Those filings indicate that as sole proprietor of GWA Capital, Adams reported GWA’s gross revenue as $39,000 in 1999, with a net profit to him of approximately $4,000. In addition, the filings show that for the 12 months ending Sept. 30, 2000, his average net monthly disposable income was $765. “Based upon the foregoing, the conclusion is inescapable that Guy Adams is neither capable of, nor financially interested in, mounting a single-handed proxy campaign costing $30,000,” says the complaint. Instead, the company says, this is evidence that Adams is a “stalking horse for others, and not a bona fide Lone Star investor.”    

The company points to the fact that Adams purchased 1,000 Lone Star shares shortly before the record date for Lone Star’s 2000 annual meeting; later he sold these shares after the record date had passed and before the 2000 annual meeting. Then, says the company, he traveled to Austin, Texas, to attend the meeting “notwithstanding any apparent available income or earnings to pay for such a trip and with no alleged investment to protect.” At the meeting, says the complaint, Adams presented himself as a Lone Star shareholder and “sought to disrupt the annual meeting and embarrass Lone Star’s directors.” The company also claims that at that meeting, Adams explored with Calpers the possibility of a working relationship to challenge Lone Star’s board in 2001. In November 2000, Adams continued his dialogue with Calpers, claims the company. (In an unusual move, Lone Star through a court order obtained from Calpers correspondence exchanged between Adams and the pension fund.) The complaint says that at that time he approached the pension fund with a plan under which Calpers would provide $1 million to cover the legal and proxy costs to challenge the Lone Star board. Under the same plan, says the company, Adams proposed that Calpers place its Lone Star shares in a partnership, which he would manage. 

The company also says Adams’ SEC filings misrepresent the change in control agreements that Lone Star entered into with the CEO and other employees in January 2001. More specifically, the complaint says Adams misstated what would trigger such agreements. Lone Star also says Adams mischaracterized certain related party transactions between the CEO and Lone Star.

Adams’ claims that he already has the support of the holders of 13 percent of the shareholders, including the support of Calpers and the LongView Collective Investment Fund, are false, says the complaint. “Defendant Adams’ claims regarding his alleged support are inherently misleading because shareholders have not yet received the company’s proxy statement and management’s recommen- dations. Any expression of ‘support’ is therefore meaningless,” says the complaint. In addition, the company says his claims of support are especially deceptive because whatever support he has received already is based on “the highly misleading and illegal materials that he has filed with the SEC and disseminated to Lone Star shareholders.”

Adams has made a motion to dismiss the case, arguing that the Kansas court lacks jurisdiction over the matter.

Investment banker Gary Lutin sent a letter dated June 14 to the company’s board expressing concerns about the lawsuit “in the context of a corporate director’s fiduciary duties.” He asks the Lone Star board to report on “all actions taken by the board to authorize the initiation and continued conduct of the Adams litigation and on the controls that have been established for independent, non-partisan oversight of the litigation.” 





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                          Editor: Rosemary Lally

Contributors: Subodh Mishra, Jason Montgomery, Christopher Shier and John Taylor

© 2001 Investor Responsibility Research Center
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