(Links added to proponent response below.)

Board Statement in Opposition

Each year, the Company undertakes the preparation of a proxy statement and the solicitation of proxies from its stockholders in connection with matters to be voted upon at its Annual Meeting of Stockholders to provide stockholders, who are otherwise unable to attend the meeting, the opportunity to vote their shares. In advance of the meeting, the Company asks each stockholder to indicate his, her or its votes for each matter to be voted upon on a proxy card and/or to indicate whether he, she or it plans to attend the Annual Meeting. Each stockholder has the option to (i) vote on each matter as he, she or it deems fit by completing the proxy and/or attending the Annual Meeting in person, (ii) abstain from voting on any given matter or (iii) abstain from voting altogether by not completing the proxy and/or not attending the Annual Meeting.

In deciding how to vote on any given issue, the stockholder may consult sources that he, she or it may find helpful, such as newspapers, business periodicals or the Internet. In addition, the stockholder may also seek guidance from organizations with whom the stockholder has a common interest, such as trade associations, political organizations, religious organizations and other groups. Many organizations prepare guidelines seeking to educate the public and make recommendations on how stockholders should vote on certain issues. In addition, some organizations prepare voting recommendations targeting specific companies. The stockholder may also choose to vote his, her or its shares in accordance with the recommendations made by the Company. In any event, stockholders are always free to choose the manner in which they will vote.

The stockholder proposal misguidedly suggests that the Company should include in its annual proxy statement the voting recommendations of institutional holders. The proposal does not provide any guidance as to how this is to be accomplished nor discusses the additional costs associated with such an endeavor, but rather imposes a burden on the Company’s Board of Directors to come up with a method for implementing a flawed proposal.

The proposal is not feasible1, because given the number of organizations that purport to give stockholders voting guidance in any given year, the Company would need to limit the number of organizations that it could include in its proxy statement and has no rational way of choosing between organizations. The Company would be in the position of having to endorse one organization over another.

In addition, providing the voting recommendations of an organization would require that the Company also include a statement of support from such organization explaining its support for the recommendations.2 The inclusion of voting recommendations accompanied by statements of support prepared by each organization creates the potential for false or misleading statements since the Company would have no control over the resulting statements. Moreover, adding voting recommendations accompanied by statements of support to an already lengthy proxy statement would add a considerable number of pages to which in turns leads to higher costs for the Company and its stockholders.3

In sum, the Company believes that the stockholder proposal is unfeasible as well as unnecessary and its implementation would undermine the long-term interests of the stockholders by substantially increasing costs relating to annual meetings.4

The Board of Directors recommends a vote “AGAINST” the adoption of the stockholder proposal regarding stockholder voting.


1. The shareowner proposal asks for a study and report.  The Board states: "The proposal is not feasible."  Surely it is feasible to perform a study and report.  As for whether enabling shareowners to imitate institutional voting decisions is feasible, that is what the proposed study would try to determine.

The Board seems to be arguing that enabling shareowners to imitate institutional voting decisions is so obviously infeasible that a study would be a waste of time and money.  But there are many potential solutions to the superficial problems imagined by the Board.  For example, the Board could investigate whether it would be legally permissible to offer the option to imitate institutional voting via the internet only, not via the paper proxy.  Already the internet voting interface at offers a voting mechanism different from the paper proxy: a large, prominent button saying "Vote my shares per directors' recommendations".

For many shareowners, especially individual investors, the degree of convenience matters a great deal.  Individual investors are not legally required to vote their stock, so many of them don't bother.  And most who do vote, simply follow the Board's conveniently displayed recommendations.  This proposal would help level that biased playing field.

2. I doubt that such a statement of support from the Board would be legally required, considering that proposals such as mine appear in the proxy without a statement of support from the Board.  The Board's study should check on this issue.

3. Again, an internet voting interface could solve this problem by using links to more detailed information for those who desire it.

4. For more on the benefits of these ideas, see the working paper "Vote Your Stock".


Response written by Mark Latham on April 10, 2004.