Secret Ballots Are Top Shareholder Demands
WHAT steams shareholders? According to IRRC tallies, corporations face a record number of proposals on ``governance issues,'' including: ``Golden parachutes.'' These are the huge severance pay and benefits packages executives promise to give themselves if they depart after a takeover. Nearly 250 of the largest 500 US companies have such plans.
``Poison pills.'' These contingency plans call for drastic action to damage the value of the company if a takeover is attempted.
Staggered board terms. They prevent the members from being sacked all at once.
State anti-takeover laws. Shareholders are asking companies to opt out.
``Greenmail.'' This is money a company pays to buy off someone mounting a takeover.
The most widespread shareholder craving is for secret ballots. ``It just goes with America and apple pie,'' says Maryellen Andersen at the State of Connecticut Retirement and Trust Funds.
She says the Connecticut funds reveal how they vote anyway. But they worry about pressure from managements on their own companies' pension funds. Secrecy would prevent retaliation.
For that very reason a company retiree endorsed confidential voting at the March 13 meeting of Fluor Corp. While a Fluor employee, he said, he had been critical of some directors but did not vote against them for fear that his career would suffer. (A spokeswoman who provided a copy of the unidentified retiree's remarks said Fluor proxy tabulation procedures do not reveal how individual employee stockholders vote.)
Just 26 percent of Fluor shares were voted for confidential balloting. The United Shareholders Association (USA), which had proposed it, expects to get only 35 percent of the vote on average this spring for its ``pro-shareholder'' reforms.
``You get 12 percent abstentions and management votes the abstentions in their favor,'' says USA director Ralph Whitworth, mentioning another practice that grates with shareholders.
Nonetheless, rather than face a proxy fight on the issue, eight firms have adopted confidential voting in advance of this year's annual meetings.
And Amoco Corp., which already had a confidential voting system, strengthened it to satisfy New York City and Connecticut employee pension funds. Employees sworn to secrecy used to count the votes. An outside agency will do it beginning in 1991, an Amoco spokesman says.
ONE issue has landed in court, that of one share/one vote. Mr. Whitworth says that executives who owned company stock would, for example, create a new class with a 5 percent larger dividend but one-tenth the votes. They would encourage other stockholders to trade their old shares for the new, but would keep the old themselves to boost their voting power.
``They were buying your vote with your money,'' he says. ``You talk about a raid? These were the worst raids in history.''
Some 185 corporations ranging from The J. M. Smucker Company to Dow Jones & Company Inc. issued shares of unequal voting power before the SEC outlawed the practice in 1988. The Business Roundtable, an association of 200 prominent US corporations, has challenged the SEC. An appeals court decision is expected this year.