The Thanksgiving Column

Thanks (presumably) to 34,000 emails vehemently opposing the repeal of shareholders’ right to file non-binding ballot proposals, social investors dodged a bullet this fall. On November 28, the Securities and Exchange Commission failed to follow through on its earlier hints that the rules governing shareholder proposals might be significantly tightened, even to the point of where they might succumb to the fate of the dodo.
Therefore, a hearty cheer and very grateful thank-you to those readers who responded to our action alert last fall! You know who you are, and we are very grateful for the time you took to contact the Commission.
As a little bonus, the SEC also adopted amendments to facilitate the use of electronic shareholder forums (“chat rooms” in the common tongue), where shareholders can exchange information exempt from the usual rules governing inter-shareholder communication. This will allow advocates an interactive forum to press the cases behind the 500-word proposals we submit. Let’s hope these chat rooms are visited by serious investors.
But even as the Commission gaveth, it tooketh away – and how. The big SEC story on November 28 was not about the bullet dodged by social investors, but about the blow to all shareholders by a 3-1 vote by the Commissioners denying us access to the proxy to nominate our own board directors. As expected, despite calls from Congress and other fair-minded people, the highly partisan vote (three Republicans vs. one Democrat) went ahead despite the fact that the Commission has been missing one Democrat, which has been missing one Democrat since the resignation of Roel Campos late last summer. Hence, the vote described by former SEC Chairman Arthur Levitt as “probably the most important [one] the commission has taken in nearly 15 years” was procedurally flawed and politically suspect.
The majority justified its ruling on the grounds of instilling predictability into this governance arena, but certainty is anything but certain and the story will not end here. Although Chairman Cox made good on his determination to have a rule in place for the 2008 proxy season, he has stated that he hopes the SEC will revisit the issue in 2008 and craft a rule to permit some access proposals. (To that, Ann Yerger of the Council of Institutional Investors, a strong supporter of proxy access, stated: “It makes no sense for the commission to do the wrong thing now but promise to try to do the right thing next year. This is a sad day for shareholders.”) Investors are not waiting passively to see what compromise the SEC will offer in ‘08. AFSCME, joined by the state treasurer’s office of North Carolina and the New Jersey Division of Investments, filed proxy access resolutions at JP Morgan Chase and Bear Stearns on the very day of the ruling, with AFSCME declaring its willingness to go to court.
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More thanks are due – to our (sob) outgoing senior analyst and all-around wonderful human being Steve Lippman, who gave us nearly six years’ service before succumbing to the powerful pull of Microsoft, which has tapped him to be its new Director of Environmental Engagement. Congratulations, Microsoft – you bagged an incredibly thoughtful, smart, insightful, strategic, hardworking and diplomatic guy. “Steve’s Greatest Hits” include a long, successful string of negotiations with companies, resulting in a raft of sustainability reports that never would have seen the light of day otherwise, commitments by big banks and financial service firms to strengthen their environmental policies, helping to get the new non-profit media watchdog Open Mic off the ground, and organizing the social investment community around the problems of global water scarcity.  We’ll miss him for his great contributions, warm presence and dry-yet-wacky sense of humor.