We won two dramatic victories in 2010. One was helping John Chevedden defend himself in the Apache vs. Chevedden lawsuit. Back in February, I worked the phone trying to secure John pro bono legal representation. I almost succeeded, but maybe it is a good thing I failed. Lawyers like to say “Anyone who represents himself has a fool for a client.” Representing himself, though, John did better than I think any high-priced lawyer could have done, and he didn’t spend a dime. Key to his success was a friend-of-the-court brief Jim McRitchie and I hammered out over ten days as February turned to March. That brief transformed the lawsuit, and the court unequivocally rejected Apache’s attempted reinterpretation of Rule 14a-8. In subsequent no-action decisions, SEC staff have steadfastly stuck to their traditional interpretation.
The other dramatic victory was changing the debate over “virtual” annual meetings. We confronted Intel over their plans to host a virtual-only meeting in 2010, and in January they agreed to not do so. In August and September, Jim McRitchie and I visited institutional investors, sent e-mails and placed phone calls, organizing a letter writing campaign to protest Symantec’s plans for a virtual-only meeting. Our efforts gained national media attention for the issue, and Symantec agreed to allow live participation at their 2011 annual meeting. Finally, I reported on a blog posting entitled Broadridge Smokes Their Own Dope on a virtual annual meeting hosted by the provider of virtual annual meeting technology. When their own technology failed, that meeting was a fiasco.
More routinely, we sent field agents to represent shareowners at annual meetings, and we continued to engage the SEC on critical issues. During the Fall, members Brett Davidson, Steven Towns, Jim McRitchie and I drafted a response to the Commission’s concept release on proxy plumbing.
In the wake of the Apache vs. Chevedden lawsuit, the Commission planned to issue a staff legal bulletin clarifying requirements for shareowners to submit proposals under Rule 14a-8. With financial regulatory reform and so much else happening, the Commission never had time to do that, so the USPX stepped in. Based on informal conversations with the SEC, and on our extensive experience working on the Apache vs. Chevedden lawsuit, the USPX issued its own recommended standards for shareowners to document holdings for the purpose of submitting shareowner proposals.
Kevin Weber and Mark Friendlich spent the first six months of this year working to implement a fully-functional website for the USPX. They put tremendous effort into the project, but it proved too ambitious for two individuals working part time. In July, we switched gears and settled on a customizable hosted solution. In less than two months, we had an exciting new website up and running. Graphic artist Ed Pontes developed a fantastic design for the site.
With the site up and running, we launched a membership program and are finishing up the process of transitioning our many supporters to paid memberships. We also launched a blog. Moving forward, we will be adding additional functionality to the website.
While 2010 was a successful year for our movement, it was a terrible year for our cause:
In January, the Supreme Court made a devastating decision in Citizens United, ruling that corporations can make unlimited political donations out of shareowner resources.
The much anticipated new SEC Rule 14a-11 was supposed to finally allow shareowners to place their own board nominations in corporate proxy materials. When the new rule was released, it had so many hurdles and restrictions as to render it almost meaningless. Then corporate interests sued the SEC to prevent implementation of the rule. The case is pending.
The financial regulatory reform Congress passed was mostly posturing. It offered incremental improvements in protecting individual investors and regulating derivatives, but the reforms have enough exceptions and loopholes to ensure that the 2008 market meltdown won’t be our last.
The hard truth is that individual shareowners—indeed society at large—is under siege by the monied interests that control our corporations, Wall Street and Washington. We are losing this battle. The minor victories the USPX won for investors this year are nothing compared to the victories the monied interests won. We have a long road ahead.
The good news, coming out of 2010, is that we proved that average investors, working together, can make a difference on substantive issues. We did that in Apache vs. Chevedden, and we did it again with virtual annual meetings. The challenge is finding how to scale that success so we have a powerful movement that can turn back the tide of corporate and financial abuse.
We need to find ways to attract and cultivate more shareowner activist-volunteers. We need to implement tools and practices that will empower those people. We need to decentralize our organization, so they won’t have to wait to be told what to do.