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.


For the report on which the article below is based, see


New York Times, May 24, 2009 column


May 24, 2009

Fair Game

Elect a Dissident, and You May Win a Prize

AFTER decades of being shut out of the director election process by the Securities and Exchange Commission, shareholders scored a big win last week. The agency is considering making it easier for investors to nominate alternative directors to corporate boards.

The proposal’s terms vary, based on company size, but investors who abide by a set of relatively simple rules could place director nominees on corporate proxies and put them to a shareholder vote.

Those interested in nominating directors at a large company, for example, must own a total of at least 1 percent of its shares and must have held that stake for more than a year. They must also be willing to certify that they are not trying to take over the company or gain more than a minority representation on the board.

Once these and several other requirements are met, shareholders could nominate directors to fill up to 25 percent of a board’s seats.

“The nation and the markets have recently experienced, and remain in the midst of, one of the most serious economic crises of the past century,” said Mary L. Schapiro, the chairwoman of the commission, when she announced the proposal. “This crisis has led many to raise serious questions and concerns about the accountability and responsiveness of some companies and boards of directors, to the interests of shareholders.”

If the rules go into effect, they will be a force for major change. In the past, only those shareholders with millions to spend on hard-fought proxy wars could hope to influence a board’s makeup.

For the next two months, the agency is seeking public comments on the proposal. Get ready to hear squawks and howls from those who think that shareholders should let wiser heads — like those on board nominating committees — decide who is fit to be a corporate director.

Naysayers will no doubt predict that the world will end and that stocks will fall if dissident slates of directors muscle their way into the boardrooms.

But a new study of 120 so-called hybrid boards — those formed when activist shareholders won one or more director seats from 2005 through 2008 — tells a different story. On average, these companies’ shares outperformed their peers in both short- and longer-term periods.

From the beginning of the contest period for a board seat through the first year of a hybrid board’s existence, companies’ total returns were 19.1 percent, or 16.6 percentage points better than peers’. And total share price performance through the three-year anniversary of the hybrid boards averaged 21.5 percent, almost 18 percentage points more than their peers.

To be sure, much of the excess return occurs shortly after an activist announces his or her intention to battle for board seats at a company. Investors, taking their cue that the company may be undervalued, typically bid up its shares in the three months leading up to the formation of a hybrid board. Keep in mind, too, that averages mask both exceptional and disastrous outcomes.

But the study, conducted by the Investor Responsibility Research Center Institute, a nonprofit organization, and Proxy Governance, a proxy advisory firm, certainly shows that directors put in place by dissident shareholders do not generally wreak havoc at these companies. In almost 90 percent of the cases, hedge funds were the driving force behind the hybrid boards.

The degree of outperformance registered at these companies varied in surprising ways. One element that seems to affect results was the size of the stake held by the dissident shareholder. The greater the stake, the bigger the gains.

At companies at which dissidents held 5 to 10 percent of shares, for instance, results over the following 15 months moderately exceeded those of their peer groups. But for companies in which the dissidents owned 10 percent to one-quarter of the stock, price appreciation significantly outshone peers, averaging almost 68 percentage points higher over the ensuing 15 months.

Performance at the companies where dissidents held less than 5 percent of shares was only in line with peers, on average.

Here is another interesting data point from the study: A company’s share performance varied based on the number of director seats that a dissident holder won. Less is more, as it turns out. Compared with their peers, boards that seated a sole dissident moderately outperformed but those companies with three new directors significantly underperformed.

In addition to allaying fears about the impact that dissident directors may have on a company’s prospects, the study provides context on the issue of proxy access to shareholders and how broad it should be. That is the view of Jon Lukomnik, director of the I.R.R.C. Institute.

“I think what it says is there is some value to owners being able to challenge existing management and that there are also some limits to that value,” Mr. Lukomnik said. “Dissidents can clearly get the market to focus on the hidden value in these companies, but delivering on it takes hard work.”

Scott A. Fenn, managing director of policy at Proxy Governance, said the study’s findings should also help dispel the myth that those who try to shake up boards are interested only in short-term profits. “On average, anyway, when hedge funds get on boards,” he said, “at least they have a decent track record of creating some value.”


A version of this article appeared in print on May 24, 2009, on page BU1 of the New York edition.


Copyright 2009 The New York Times Company






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