What is a "shareholder proposal"?
Why are most shareholder proposals non-binding on management?
Who can present a shareholder proposal?
How long can a shareholder proposal be?
How much does it cost a shareholder to submit a proposal?
How much does it cost a company to attempt to exclude a proposal?
How does a shareholder submit a shareholder proposal to a company?
How does a company attempt to exclude a shareholder proposal?
What non-procedural bases can a company rely on to exclude a shareholder proposal?
Who determines if the procedural and substantive restrictions of the shareholder proposal rule have been violated?

B. Ability of Shareholders to Solicit Support for their Proposals Online

Can a shareholder proposal refer to a Web site that contains additional support?
What has been the evolution of the SEC staff's position on URLs in proposals?
What are the possible consequences of the SEC staff's position on URLs?
Can a proponent discuss its shareholder proposal on a Web site even if its URL is not permitted to be in its proposal?
Can a shareholder post information on a Web site about how it intends to vote on a company proposal?
How does the Internet affect the future of shareholder proposals?
Can an investor ask an eligible shareholder to submit a proposal on its behalf?
What do critics of the shareholder proposal framework say about the Internet's impact on the process?
Which Web sites provide resources to assist proponents to draft their shareholder proposals?

C. Online Shareholder Communications outside the Proposal Process

Can shareholders communicate online about their proposals without it being deemed a solicitation of proxies?
When should shareholders file proxy soliciting materials for their online communications?
Why do shareholders use the Internet to complain about a company?
What are examples of retail shareholders communicating on the Internet?
How are institutional investors communicating on the Internet?
What are examples of institutional investors communicating on the Internet?
Can a shareholder submit a proposal that asks a company to include specific information on its Web site?
Can a shareholder submit a proposal that asks a company to establish a Web site for shareholders to use?
Can a shareholder submit a proposal that asks a company to provide access to a stockholders' meeting through the company's Web site?
Can a shareholder submit a proposal that asks a company to confirm message board rumors that it's up for sale?
Can a shareholder submit a proposal that asks a company to post its SEC and other regulatory filings on its Web site?
Can a shareholder submit a proposal that asks a company to allow shareholders to decide whether they receive SEC documents electronically or in paper?

A. Understanding Shareholder Proposals

What is a "shareholder proposal"?

It's a vehicle for a shareholder to communicate with a particular company and its shareholders. A shareholder can have its proposal disclosed in a company's proxy materials and presented to shareholders for a vote - so long as the shareholder follows the procedures and is not substantively excludable under the SEC's shareholder proposal rule.

A shareholder that submits a proposal is known as a "proponent." A proposal typically consists of a resolution and a supporting statement.

Source: The shareholder proposal rule is Rule 14a-8 under the Securities Exchange Act of 1934.

Why are most shareholder proposals non-binding on management?

To avoid exclusion under the shareholder proposal rule.

If shareholders had their druthers, they would propose matters that are binding on management. However, most binding shareholder proposals are excludable since they fall within the management authority of a company's Board of Directors - and can be excluded by companies under the shareholder proposal rule (since the proposals seek specific corporate action that is inconsistent with the Board's authority). A shareholder can evade this problem by making its proposal non-binding on the company, rather than mandatory.

As determined under state law, there are very few types of proposals that can be binding on management. The ability to submit binding shareholder proposals currently is a matter of great debate and likely will be resolved in the courts.

Source: Rule 14a-8(i)(1) allows companies to exclude most mandatory proposals as "not a proper subject for action by shareholders" under the corporate law of the company's state of incorporation.

Who can present a shareholder proposal?

Almost any shareholder - so long as they beneficially own more than $2k worth of the company's stock for at least one year (in addition to other technical conditions).

A shareholder can only submit one proposal for a particular stockholder's meeting.

Source: Rule 14a-8(b) contains the shareholder eligibility requirements and Rule 14a-8(c) limits proponents to one proposal per meeting.

How long can a shareholder proposal be?

No longer than 500 words, including the supporting statement. See more @ whether a shareholder can include a URL as part of the 500 words.

Note that each word in a proposal and supporting statement are counted towards this limit - even words such as "Resolved."

Source: Rule 14a-8(d) contains the length limits for a proposal.

How much does it cost a shareholder to submit a proposal?

The proposal process is virtually cost-free for shareholders - there is no filing fee to submit a proposal to the company or to respond to a company's exclusionary request to the SEC staff.

The process essentially requires a shareholder to be knowledgeable about the requirements and restrictions of the shareholder proposal rule and to closely follow the procedural process set forth in the rule. A proponent does not necessarily need to hire an attorney to navigate the process and submit a proposal - since the shareholder proposal rule is written in a plain English Q&A format and the SEC staff is available to assist proponents at (202) 942-2900. There also are a number of Web sites that have resources to assist proponents such as the SEC's Staff Legal Bulletin No. 14. See more @ Web sites with resources for proponents.

How much does it cost a company to attempt to exclude a proposal?

Basically nothing - the SEC does not have a filing fee for no-action requests.

Many companies use in-house counsel or outside counsel to draft their no-action requests. Many exclusion requests are plain vanilla - meaning that they are relatively easy to prepare by closely following the format of prior requests.

How does a shareholder submit a shareholder proposal to a company?

By following the procedural and substantive restrictions in the shareholder proposal rule.

This includes consideration of the deadline for submitting a proposal as disclosed in the company's proxy statement from last year (or as discussed in subsequent quarterly reports on Form 10-Q or 10-QSB if the deadline has changed after the proxy statement was delivered - normally because the company's Board of Directors changed a bylaw).

Source: Rule 14a-8(e) contains the deadline requirements.

How does a company attempt to exclude a shareholder proposal?

A company can attempt to exclude a proposal if either:

a proponent does not follow the proper procedures, or
if the proposal's subject is not appropriate as determined under the shareholder proposal rule (see more @ non-procedural bases).

To exclude a proposal, a company must timely submit a no-action request to the Office of Chief Counsel in the SEC's Division of Corporation Finance (with a copy also delivered to the proponent) and receive a favorable written response from the SEC staff.

"Timely" means at least 80 days before a company files its definitive proxy material with the SEC (or a shorter period if the company can show good cause for missing the deadline).

Source: Rule 14a-8(f) and (j) sets forth the details of the process for a company to exclude a proposal.

What non-procedural bases can a company rely on to exclude a shareholder proposal?

There are 13 bases in the SEC's shareholder proposal rule:

improper under state law
violation of law
violation of proxy rules
personal grievance or interest
relevance
absence of power or authority
management functions
relates to election
conflicts with company's proposal
substantially implemented
duplication
resubmissions
specific amount of dividends

Source: Rule 14a-8(i) sets forth the substantive bases for excluding a proposal.

Who determines if the procedural and substantive restrictions of the shareholder proposal rule have been violated?

The Office of Chief Counsel in the SEC's Division of Corporation Finance. A company that desires to omit a shareholder proposal must first timely submit a no-action request to the Chief Counsel's Office and receive its written concurrence in a no-action response.

A proponent can rebut a company's arguments for exclusion before the Chief Counsel's Office makes a decision. To rebut a company's arguments, a proponent should promptly send a letter with its arguments to the Chief Counsel's Office after it receives a copy of the company's no-action request. Note that there is no specific time limit for a rebuttal - but the SEC staff can act even if it doesn't receive a rebuttal.

If a company or a proponent doesn't like the Chief Counsel's Office's final decision, it can ask the Office to reconsider its response or appeal directly to the Commissioners of the SEC - but this is rarely done and seldom successful (although there is a higher likelihood that the Commissioners will consider an appeal if the principal issue is novel and unique).

The SEC does not have written guidelines for an appeal - a proponent can send a letter to the Chief Counsel's Office asking for reconsideration by that Office or asking that the Commission itself consider the appeal (with a copy to the SEC's Office of the Secretary). If the Commissioners reject the appeal, the SEC's Office of the Secretary will send the proponent a letter indicating that the Commission will not reconsider the request.

Source: The requirement for a proponent to promptly rebut a company's arguments is in Rule 14a-8(k).

B. Ability of Shareholders to Solicit Support for their Proposals Online

Can a shareholder proposal refer to a Web site that contains additional support?

Yes - -so long as the Web Site doesn't have false and misleading information.
During the past few years, there had been a continuous debate whether a Web site address (also known as a "URL") should be permitted in a shareholder proposal or its supporting statement. Over time, the SEC staff's position on this matter gradually evolved through responses given in a series of no-action letters.

In mid-July 2001, the staff issued a Staff Legal Bulletin on shareholder proposals that more definitively addressed this issue and may have answered some aspects of it, once and for all. In Sections C(2)(b) and F(1) of the Bulletin, the staff presented the following questions and answers related to this issue:

Does referencing a website address in the proposal or supporting statement violate the 500-word limitation of rule 14a-8(d)?

No. Because we count a website address as one word for purposes of the 500-word limitation, we do not believe that a website address raises the concern that rule 14a-8(d) is intended to address. However, a website address could be subject to exclusion if it refers readers to information that may be materially false or misleading, irrelevant to the subject matter of the proposal or otherwise in contravention of the proxy rules. In this regard, please refer to question and answer F.1.

May a reference to a website address in the proposal or supporting statement be subject to exclusion under the rule?

Yes. In some circumstances, we may concur in a company's view that it may exclude a website address under rule 14a-8(i)(3) because information contained on the website may be materially false or misleading, irrelevant to the subject matter of the proposal or otherwise in contravention of the proxy rules. Companies seeking to exclude a website address under rule 14a-8(i)(3) should specifically indicate why they believe information contained on the particular website is materially false or misleading, irrelevant to the subject matter of the proposal or otherwise in contravention of the proxy rules.

However, this guidance probably is not the last time the staff will address this issue as the Bulletin still places the staff in the unenviable position of having to make difficult subjective determinations as to whether the content related to the URL is false and misleading.

Source: Staff Legal Bulletin No. 14 (July 13, 2001), is available at www.sec.gov/interps/legal/cfslb14.htm.

What has been the evolution of the SEC staff's position on URLs in proposals?

In 1998, the Division of Corporation Finance and the Division of Investment Management first addressed this issue in three no-action letters: Pinnacle West Capital Corp. (March 11, 1998), Templeton Dragon Fund (June 15, 1998), Inc. and The Emerging Germany Fund, Inc (December 22, 1998). The Templeton Dragon Fund and Emerging Germany Fund letters were processed in the Division of Investment Management because they related to mutual funds and the Pinnacle West letter was processed by the Division of Corporation Finance because it related to an operating company.

In these no-action requests, the companies made a variety of arguments that Web site addresses within a proposal or supporting statement should be removed by the proponents or else the companies should be permitted to exclude the proposals from their proxy materials. These arguments included:

the URL caused the proposal to violate the 500-word limitation (Rule 14a-8(d)),

the URL is "contrary to the proxy rules" since the site's content was not "submitted" to the company (Rule 14a-8(i)(3)),

the URL's content contains false and misleading information (Rule 14a-8(i)(3)), and

the URL's content relates to a personal grievance or is designed to further a personal interest not shared by other shareholders (Rule 14a-8(i)(4))

In its responses for these letters, the staff required the proponents to remove the URLs from their proposals. Although the staff does not providing its reasoning for its decisions in no-action responses, these responses appeared to be based on the envelope theory - that the mere reference to a Web site was considered to incorporate the Web site's contents into the shareholder proposal so that it was deemed to exceed 500 words. This is borne out by commentators who, at the time, tended to focus on the argument that inclusion of the URL allows shareholders to exceed the word limit. In response to this argument, proponents stated that the original intent of the 500-word limit was to keep the costs of printing and mailing proxy materials reasonable and to ensure that the length of proposals did not obscure other important matters disclosed in proxy materials. They noted that including a URL in proxy materials did not implicate these concerns.

However, the next generation of no-action responses revealed that the real issue in this debate was whether the content associated with the URL is reliable. The SEC staff appeared to hear the cry from proponents that there should be equal freedom of communication. Proponents had noted that, in their SEC documents, companies are permitted to disclose their Web site addresses and could post solicitation materials if they desired on these sites (after they filed the materials with the SEC as additional soliciting material). Another observation by proponents was that shareholders can freely communicate with each other outside the shareholder proposal rule parameters about their proposals (so long as they do not solicit proxies) - how much real harm would a proponent cause if it communicated online regarding a proposal and advertised that communication in the company's proxy statement?

In 2000, the staff permitted the same proponent in two letters, Electronic Data Systems Corporation (March 24, 2000) and First Energy Corp. (March 7, 2000), to include a URL for a Web site that was not controlled by the proponent and which not directly solicit support for the proposal. In their no-action requests, the companies argued that allowing a Web site reference subverted the intent of the word limit and that the contents of a referenced Web site may evolve over time which could include false and misleading information or other information which the company might not be able to address in its statement in opposition due to timing considerations. The companies also argued that the proponent was experienced and should be familiar with the staff's prior position regarding URLs.

The proponent replied that it had no control over the Web site at issue, the Council of Institutional Investor's Web site. He noted that he was not a member of the Council of Institutional Investors. In contrast, the proponent noted that the company had numerous Web sites that showed shareholders the most favorable view of management performance and policy and that it was highly likely that shareholders would have more contact with the company's Web sites than with the Council of Institutional Investors' Web site. In addition, the proponent noted that a URL could benefit shareholders by directing them to other sources of information to evaluate the information presented in the proposal. The proponent distinguished the Pinnacle West letter because that involved a Web site developed by an individual scientist, as compared to the CII Web site that was run by an established and respected corporate governance organization with major corporate members. In addition, the proponent noted that the Pinnacle West proponent agreed that his cited Web site may be judged "too controversial" for the staff.

In 2001, the staff appeared to go even one step further. In a no-action letter to Gillette Company (February 1, 2001), the proponent successfully included a proposal even though it included a URL to his own Web site that provided more information about the proposal. The company made the typical arguments noted above and sought to exclude the proposal's references to the Web site. The proponent observed that a proposal in the company's proxy statement from last year referenced a URL - www.ceres.org - about which the company did not complain. In addition, the proponent offered to - and did - link from his Web site to the company's Web site as a way to alleviate some of the concerns expressed by the company. Although the staff did side with the proponent, it is unlikely that these factors played a role in its decision.

What are the possible consequences of the SEC staff's position on URLs?

From the Bulletin, it is clear that the 500-word limit argument is ineffective - and that the staff will apply a facts and circumstances test regarding whether the referenced Web site contains false and misleading information. Since the company has the burden of proof under the shareholder proposal rule, the staff will make its decision primarily based on a company's arguments along with any rebuttal provided by the proponent. Clearly, the staff does not have the resources to continuously check the evolving information on a Web site to ensure that it is not false and misleading, particularly during its busy period in the Winter that leads up to the proxy season. As a result, it is important that a company:

carefully presents its arguments when it first files its no-action request,
monitors the proponent's Web site for any problematic developments after it files the request, and
inform the staff if more troublesome information is posted on the site.

As a practical matter, however, it probably will be difficult for companies to "win the day" making false and misleading arguments to the staff. Since this is such a subjective determination in most cases, proposals rarely are excluded on this basis. It is possible that the staff will apply a different - and more flexible - standard for removal of URLs than it does for complete exclusion of proposals. Even if the staff takes company arguments to heart about false and misleading information, it may allow the proponent an opportunity to cure the troubling content on a Web site before forcing the removal of a URL. This is the typical result when companies complain about false and misleading information in a proposal.

The probable result of the staff's position is that a more extensive "dialogue" between companies and proponents will be played out on the Web. The Gillette experience is a perfect example. After the staff sided with the proponent to include the URL, not only was the proponent able to post his proposal on his Web site, he added "Frequently Asked Questions" as well. Even more notable was that he posted the company's statement of opposition from the company's proxy statement and then added a rebuttal to that disclosure.

It is not too difficult to imagine a scenario where a proponent and management go back and forth rebutting each other's statements about a proposal - right up until the date of the shareholder's meeting! Since shareholders who vote on these matters get the benefit of more information, it remains to be seen whether this is necessarily a good thing or bad overall. However, this sort of continuous banter may prove difficult for the staff to monitor if it occurs on a regular basis. It would appear to require more staff resources since this would be akin from the nature of a dialogue during a contested election of directors.

Source: The Gillette rebuttal and other information is posted on the Corporate Monitoring Web site at www.corpmon.com.

Can a proponent discuss its shareholder proposal on a Web site even if its URL is not permitted to be in its proposal?

Yes - so long as the content is not false and misleading and is not otherwise soliciting proxies. See more @ when is a proponent deemed to be soliciting proxies.

The SEC has not specifically addressed the boundaries of soliciting support online for shareholder proposals outside the boundaries of the rule - but there does not appear to be a basis to prevent a proponent from discussing its shareholder proposal on a Web site.

Can a shareholder post information on a Web site about how it intends to vote on a company proposal?

Probably. Shareholders are permitted to publicly announce how they intend to vote (and why they intend to vote that way) without taking any action under the proxy rules - so long as they don't actually solicit proxies.

However, there is some uncertainty about this issue. The SEC's rule exempts these type of announcements made in a variety of public forums from the definition of a proxy solicitation - but the rule does not specifically contemplate Web sites, message boards or listservs. See more @ can a shareholder discuss its proposal online without it being deemed a solicitation.

Source: Rule 14a-2(l)(2)(iv) exempts these certain announcements from the definition of a proxy solicitation and lists the types of forums as: speeches, press releases, published or broadcast opinions, statements or advertisements appearing in a broadcast media, newspaper, magazine or other bona fide publication disseminated on a regular basis. The question remains if announcements distributed online are "bona fide publications disseminated on a regular basis."

Can a shareholder post statements on the Web that urge other shareholders to vote against a company proposal?

Yes - so long as the shareholder has no special interest in the matter being voted on and the statements are not false and misleading.

An institutional investor that owns more than $5 million of the company's stock who urges shareholders to vote must file a notice with the SEC. The notice must include a copy of its related Web site content.

Source: Rule 14a-2(b)(1) exempts these types of communications from the definition of a proxy solicitation.

How does the Internet affect the future of shareholder proposals?

It's unknown at this time.

It is true that the Internet can serve as a cheap, faster and more efficient platform for a shareholder's campaign to raise awareness of an issue - and it can be done outside the restrictions of the shareholder proposal rule. However, some commentators believe that if shareholders can effectively organize online, the Internet may render the shareholder proposal process obsolete - since shareholders do not have to depend on getting a proposal in a company's proxy statement to get their message widely distributed.

On the other hand, the Internet allows shareholders to learn about how they can navigate the shareholder proposal process - and likely will result in more proposals being submitted. To some extent, this trend is already apparent. See more @ criticism of the proposal process due to the Internet.

Source: An interesting discussion of the future of shareholder proposals is in George Kobler, "Shareholder Voting over the Internet: A Proposal for Increasing Shareholder Participation in Corporate Governance," 49 Ala. L.Rev. 673 (Winter 1998).

Can an investor ask an eligible shareholder to submit a proposal on its behalf?

In theory, these "alter ego" practices are prohibited. In practice, it's somewhat unclear.

There have been circumstances where ineligible investors have teamed with eligible shareholders to submit a proposal. And the Internet's communication abilities likely will allow this practice to grow. See more @ what are the eligibility requirements to submit a proposal.

In most cases, the SEC staff has not allowed proponents to aggregate their shareholdings - even if it's just to assist the proponent to draft the proposal. This issue has arisen when union or family members got together - it is now an issue due to the rise of online communities.

Retail investors - with limited resources - use simpler methods to complain using the Net. Some people troll message boards seeking shareholders to make them their agents so that they are eligible to submit shareholder proposals to certain companies. Although the SEC staff has thrown out at least one proposal on "alter ego" grounds (e.g. TRW Inc., SEC no-action letter, available January 24, 2001), proponents have successfully beaten back management challenges on other occasions (e.g. Boeing Company, SEC no-action letter, available February 8, 2001).

Source: In Comshare, Inc. (August 23, 2000), the SEC staff excluded the proposal on other grounds - but it did involve shareholders "bonding" online to submit a proposal. An example of family members not being able to combine holdings to become eligible to submit a letter is Staten Island Bancorp, Inc. (March 21, 2000).

What do critics of the shareholder proposal framework say about the Internet's impact on the process?

More proposals will be submitted - and they will be of lower quality.

These critics worry that online tutorials will drive more retail investors to submit meaningless proposals. See more @ what Web sites have online tutorials regarding the proposal process.

While the number of proposals has increased recently, it may be too early to determine if it's primarily due to the Internet. However, the ability to e-mail comments on SEC rulemakings clearly appears to be a factor in the dramatic increase in the number of comments that the SEC has received lately - but another factor may be the controversial nature of the rulemakings. See more @ controversy over Regulation FD.

Source: One article criticizing the shareholder proposal framework is Charles Nathan, "Pointless Shareholder Activism," The Daily Deal (November 6, 2000).

Which Web sites have resources to assist proponents to draft shareholder proposals?

These Web sites range from providing a tutorial about how to navigate the process - to actually providing template proposals themselves. See more @ whether ineligible proponents can use the Internet to find shareholders that are eligible to submit proposals.

These sites include:

The Corporate Library (www.thecorporatelibrary.com) - has a list of proposals that can be sorted by issuer, date, proponent or type of proposal - and the full text of each proposal can be viewed and copied.
Responsible Wealth (www.responsiblewealth.org) - has questions and answers about how to submit a proposal - as well as a summary of the types of proposals submitted over recent proxy seasons.
Friends of the Earth (www.foe.org) - has a list of sample proposals and filing letters as well as tutorials about how to submit proposals and present them at stockholders' meetings.
Seattle Community Network's Northwest Corporate Accountability Project (www.scn.org/earth/wum/2Whatsr.htm) - has questions and answers about how to submit a proposal - as well as a checklist for proponents to help them remember how to properly prepare and submit the proposal.
SocialFunds.com(www.socialfunds.com) - focuses on socially responsible investing. Its "Shareholder Activism" has a database of shareholder proposals by category and keeps track of their status. It also contains social activism news, including a "spotlight" on particularly egregious matters, and "success" stories. It urges visitors to get involved and offers a 4-step tutorial on activism.

C. Online Shareholder Communications outside the Proposal Process

Can shareholders communicate online about their proposals without it being deemed a solicitation of proxies?

Not as long as they don't actually solicit proxies.

Rather, the proponent should ensure that its communications merely inform the market about how it intends to ote (i.e. how the intend to vote and the reasons therefore) - without explicitly urging others to vote the same way. Although the SEC staff has not explictly addressed this issue, under the definition of "solicitation" in Rule 14a-1(l)(2)(iv), proponents probably can safely make this argument if they don't solicit a proxy in any colorable manner.

When should shareholders file proxy soliciting materials for their online communications?

If they are soliciting proxies - and the definition of "proxy solicitation" is broad. It is important to keep in mind that a proponent or other shareholder may be engaging in proxy solicitation without their knowledge - even without asking for other shareholders to take action (such as submit or revoke proxy cards).

This is a facts and circumstances determination. The threshold issue is whether the shareholder's communications relate to - or have the effect of - changing or influencing the control of the company discussed.

Note that proponents can freely discuss their proposals online - so long as these communications don't cross the line into proxy solicitation. See more @ the ability of proponents to refer to a website with additional support.

Source: Rule 14a-1(l) of the Securities Exchange Act of 1934 defines "solicitation" to include communications that are made under circumstances reasonably calculated to result in obtaining, revoking or withdrawing a proxy.

Why do shareholders use the Internet to complain about a company?

It gives them the potential for a high level of visibility - which can be done easily, fast and inexpensively.

In a sense, it creates a more level playing field - since shareholders typically do not have resources equal to management.

Shareholders can effectively use the Internet by one or more of the following:

create or contribute to a Web site,
post a message or establish a message board, or
form an e-mail mailing or discussion list.

What are examples of retail shareholders communicating on the Internet?

Thousands of shareholders are active on message boards - and have instigated movements that have impacted companies on numerous occasions. In addition, some retail investors go further and create Web sites devoted to complaining about a company.

Although the companies that are impacted by retail investors tend to be small, some larger companies have been impacted. For example, in March 2000, Lucent Technologies lost $4 billion (or 4%) of its market capitalization within a few hours due to a fake press release attached to a message. See more @ cybersmears on message boards.

In addition, the founders of the eRaider Web site were inspired to use the Internet to try to effectuate change after realizing that the aggregate holdings of investors in a message board community could control a troubled company. See more @ eRaider.

How are institutional investors communicating on the Internet?

They use password-protected secure Web sites and encrypted e-mail to communicate quickly. They also publicly announce how they intend to vote on matters.

Some activist money managers believe that their ability to demonstrate effective online communication can prevent disagreements with management from becoming proxy fights. See more @ which institutional investors communicate online.

What are examples of institutional investors communicating on the Internet?

In 1999, CalPERS (one of the largest institutional investors) began to announce how it intended to vote on certain matters for a number of stockholder meetings on its Shareowner Forum Web page (www.calpers-governance.org/forumhome.asp). This Web page also has: a list of the shareholder proposals that CalPERS has submitted since 1987 - as well as the voting outcomes on these proposals; its corporate governance principles; a list of securities litigation class actions suits that it has been the lead plaintiff; and a list of companies on its "Focus" list.
The Council of Institutional Investors uses its Web site (www.cii.org) to post its corporate governance policies; report how management responded after their companies received a majority vote for non-binding shareholder proposals; and list the 20 companies in its annual focus group. Recognizing the value of "sunlight," not only does the CII report how management responds after a company receives a majority vote for non-binding shareholder proposals - it scans the response letter itself on to the Web site. The "Hot Issues" Web page contains each comment letter it has submitted to the SEC on various issues.
The Corporate Library (www.thecorporatelibrary.com) was founded in 1999 (by the founders of Lens Investment Management, Nell Minow and Bob Monks). Besides numerous articles on corporate governance issues, the site is a central repository of shareholder proposals for recent proxy seasons. The proposals can be sorted by issuer, date, proponent or type of proposal - and the full text of each proposal can be viewed. The Corporate Library also has a database of the employment contracts for chief executive officers for the Fortune 500 companies. The site mentions the best and worst employment agreements from an activist's viewpoint and has a comprehensive bibliography of executive compensation articles. The site also has a beta version of its Director Screening Tool that covers the S&P Supercomposite Index of 1500 companies. This powerful feature allows a visitor to research a director's age, stock holdings, attendance record and number of directorships - all of which may be relevant for stockholders deciding how to cast their vote come re-election time.
Never launched, Investor's Bullhorn (www.ibullhorn.com) had hoped to be a branded corporate governance portal that provides proxy research and planned vote summaries for all shareholders of U.S. public companies. The site had planned to offer functional vote features that, among other things, enabled shareholders to disclose how they plan to vote their proxies, either publicly or as part of an anonymous group. Initially, the site would have provided numerous automated functions for shareholder activists, including creation and submission of shareholder proposals, solicitation of proxies from other shareholders, and recommendations for nominees to the Boards of Directors.
eRaider (www.eraider.com) was founded by two professors to target perceived underperforming companies (mainly mid- and small-cap) and use materials on the Web site to take corrective action. So far, a half dozen companies have been targeted, complete with a posted notice about when the next target will be announced. eRaider engages in a variety of offline shareholder activities, including submitting shareholder proposals, negotiating with management and boards, speaking at annual meetings and appealing to regulators. Many of these activities crossover to the Web as part of eRaider's online pressure tactics. Once a target is identified, eRaider posts articles related to the target's business and financials. The "State of the eRaid" includes an action plan related to each target company as well as related correspondence. For example, this section of the site has several letters from third parties addressed to SEC staff members urging them to take action. Perhaps more significantly, there are message boards dedicated to each target company where frustrated stockholders can find each other.
The AFL-CIO (www.aflcio.org/paywatch/index.htm) maintains the Executive PayWatch where investors can calculate how much a senior manager earns compared to them. In addition, the AFL-CIO periodically posts information that is activist-oriented - such as 10 case studies on CEOs that they claim are "out-of-this-world" and a 1999 scorecard on how money managers voted on shareholder proposals sponsored by pension funds and a new section of CEO pay and global unfairness.
Lens, Inc. (www.lens-inc.com) changed its mission in 2000 from an activist fund to an �activist gun for hire,� capitalizing on its skills learned as a long-time user of the Web. Before its new role, Lens functioned as an activist money manager by targeting companies for corrective action. For each targeted company (last year there were five), Lens posted two different sets of documents. The first set was publicly accessible and typically contained Lens� action plan; demand letters to management; profile of the target company and management; list of target companies� large stockholders; any related lawsuit filings; links to relevant news articles, SEC filings, company Web sites and stock history; and pertinent e-mail addresses at the target company. The second set of documents was password accessible solely by the Lens Group members so they could communicate confidentially. In its new capacity, Lens will help others become activists using these online tactics.
Japonica Partners (www.japonica.com) is an activist money manager whose site is password protected so that members can communicate confidentially.
European Corporate Governance Network (www.ecgn.ulb.ac.be/ecgn/codes.htm) has a useful global directory of corporate governance codes, principles and recommendations sorted by country, including the full text of these documents in some cases.
International Corporate Governance Network (www.icgn.org) is best used to find out information about this international association of institutional investors.
Global Corporate Governance Forum (www.gcgf.org) contains numerous corporate governance speeches - and its sponsor, the World Bank, has posted thousands of articles, abstracts and references related to international corporate governance at www.worldbank.org/html/fpd/privatesector/cg.

Can a shareholder submit a proposal that asks a company to include specific information on its Web site?

It's possible - but uncertain.

There is a line of no-action letters that allow companies to exclude proposals that relate to the way disclosure is presented - but the SEC staff in a recent letter indicated that it would not automatically permit the exclusion of disclosure decisions. Rather, the SEC staff appears to focus on the nature of the requested disclosure itself.

Source: The SEC staff's analysis in Nalco Chemical Company (available May 6, 1997) was placed into question by Johnson Controls, Inc. (available October 26, 1999). It's unknown if Johnson Controls indicates that the SEC staff will allow proposals that do not address any specific disclosure - or just the manner in which information is disseminated.

Can a shareholder submit a proposal that asks a company to establish a Web site for shareholders to use?

It's unlikely - based on the how the SEC staff has addressed related issues. See more @ proposals requesting that SEC filings be posted on the Web.

In a no-action letter, a proponent asked a company to create an online forum so that the company could communicate more with shareholders - and vice versa. The company argued that this involved its discretion to choose how it communicates with shareholders - so that is should be excluded under the ordinary business exception. The SEC staff did not address this argument - since the proposal was excluded on procedural grounds.

Source: The no-action letter is Chevron Corporation (available February 10, 1998).

Can a shareholder submit a proposal that asks a company to provide access to a stockholders' meeting through the company's Web site?

It's unknown - but not likely based on the SEC staff's exclusion of a proposal that would have required a company to post its SEC filings on its Web site. See more @ proposals requesting that SEC filings be posted on the Web.

In a no-action letter, a proponent asked a company to supplement its physical annual meeting with an electronic meeting. The company was able to successfully argue that the proposal was not timely and the SEC staff allowed the exclusion on this procedural ground - so the substantive issue has not yet been addressed.

Source: Management successfully sought exclusion of the proposal as being untimely under Rule 14a-8(e)(2) in Sabre Holdings Corp. (available January 31, 2000).

Can a shareholder submit a proposal that asks a company to confirm message board rumors that it's up for sale?

Probably - the SEC staff did not allow a company to exclude a proposal that sought confirmation of rumors on message boards that the company had received offers for sale.

Note that the proposal itself and the no-action request from the company did not mention that there were rumors on message boards - the proposal merely asked for the company to inform stockholders anytime that it received offers for sale.

Source: Management unsuccessfully sought exclusion of the proposal as an ordinary business matter under Rule 14a-8(i)(7) in Jackpot Enterprises Inc. (available October 5, 1998).

Can a shareholder submit a proposal that asks a company to post its SEC and other regulatory filings on its Web site? Probably not - the SEC staff allowed a company to exclude a proposal that would have required a company to post its SEC filings on its Web site. The SEC staff concurred that a company's Web site content relates to ordinary business operations.

Source: Management successfully sought exclusion of the proposal as an ordinary business matter under Rule 14a-8(i)(7) in Excalibur Technologies Corp. (May 4, 1998).

Can a shareholder submit a proposal that asks a company to allow shareholders to decide whether they receive SEC documents electronically or in paper? Probably not. The SEC staff has allowed a company to exclude a shareholder proposal as an ordinary business matter - because it related to forcing a company to allow stockholders to choose between receiving annual reports and other SEC documents either electronically or in paper. The company successfully argued that the medium by which it meets its delivery obligations is a business decision.

Source: These no-action letters are Travelers Group Inc. (December 19, 1997)(excludable as ordinary business under Rule 14a-8(i)(7)) and Merck & Co. (February 10, 1998)(excluded due to procedural problems - proponent did not hold at least $1,000 worth or 1% of the company's stock).