Members of the United States Proxy Exchange (USPX) are celebrating the launch of our new website today. The site is key to our plan to decentralize the organization, a strategy we formulated at a June 11 meeting of long-term members. The new site will provide members with a host of social networking tools aimed at the specific needs of shareowners, allowing us to network and self-organize around core issues. One of many new tools is the ability to create a blog or move a blog to the USPX server, as I have done with CorpGov.net. Hopefully, it will help us move from occupying Wall Street to transforming Wall Street.
The United States Proxy Exchange (USPX) is a non-profit organization, a sort of chamber of commerce for shareowners, dedicated to facilitating shareowner rights and confronting Wall Street abuse. Members are individual shareowners, although many work or have worked in the industry. As a grassroots movement, the USPX accepts no funding other than membership dues. This ensures the organization is free of outside influence. It is run and funded entirely by individual shareowners for the benefit of individual shareowners.
Track Record of Success
In its three-and-a-half year history, USPX has established a track record of successes, including the following milestones.
Summer 2008: Proxy Transfer Trials. Members assigned proxy rights to other members who attended meetings and voted on their behalf. The trials demonstrated the practical use of a tool that may be further automated in the future and could enable shareowners to vote for specific directors where there is a split ticket, as well as in other circumstances.
Winter 2009: The USPX launched the Field Agents Program. Field agents are members who volunteer to attend nearby annual meetings to move proposals submitted by proponents who live much further away. This generally free service facilitates corporate democracy, while giving volunteers an empowering experience.
Summer 2009: USPX members drafted a 69 page comment letter on the SEC’s proposed Rule 14a-11 that would have created a federal rule allowing shareowners to include their own board nominations in the proxy materials corporations distribute each year (proxy access). Our letter responded to a substantial portion of the technical questions posed by the SEC, criticized the proposed rule for essentially limiting “proxy access” to large institutional investors and for other flaws. Rule 14a-11 was subsequently rejected by the courts.
Autumn 2009: The USPX launched an educational program that pairs members who have never filed a shareowner proposal with experienced shareowners who guide them through the process of filing and defending their first proposal.
Winter 2010: The USPX intervened with a friend of the court brief in a lawsuit brought by Apache Corp. against individual shareowner John Chevedden, who was representing himself. By clarifying technical issues related to “street name” registration of shares, and laying out shareowner rights imperiled by Apache’s frivolous claims, the USPX averted a potentially devastating decision from the court.
Winter 2010: Intel Corp. announced it was scrapping its annual meeting in favor of a so-called “virtual-only annual meeting.” While allowing shareowners to “attend” annual meetings via the Internet has the potential to increase shareowner participation, it also poses the risk that the technology could malfunction or be deliberately used to disenfranchise shareowners. The USPX notified Intel of these concerns and organized a shareowner response. Intel reversed course and held a live annual meeting, with an option for virtual attendance, instead.
Autumn 2010: After Symantec Corp. defied shareowner requests that they not hold a “virtual-only annual meeting”, the USPX organized a letter writing campaign. Large institutional investors joined the campaign, which attracted nationwide media attention. The following year, Symantec allowed live participation at their annual meeting.
Autumn 2010: USPX members drafted a 29 page comment letter on an SEC concept release for improving the system whereby corporate proxies are distributed to shareowners, collected and tabulated—the so-called “proxy plumbing” system. The USPX letter responded to a substantial portion of the technical questions posed in the SEC concept release, giving individual shareowners a voice in a debate that is generally presumed too specialized for them to substantively participate.
Autumn 2010: In the wake of the Apache vs. Chevedden lawsuit, the SEC failed to issue much-needed clarification of the requirements for shareowners to document their share holdings for the purpose of filing shareowner proposals under Rule 14a-8. The USPX met shareowners’ need with our own interim guidelines, fully informed by issues raised in the lawsuit. Those guidelines were the only substantive guidance for shareowners until a year later, when the SEC finally issued Staff Legal Bulletin No. 14F (CF).
Spring 2011: As part of the Dodd-Frank financial reform, shareowners were granted a right to vote on executive compensation packages but the Compensation Discussion and Analysis (CD&A) portion of the proxy tends to be impossible to analyze in a reasonable amount of time. USPX members responded by drafting simple Shareowner Guidelines for Say-on-Pay Voting, allowing shareowners to quickly make voting decisions. As far as I know, they are the only such guidelines that address the issue of pay ratcheting up every year due to the fact that most boards believe their CEO is above average.
Autumn 2011: Following a court decision to strike the SEC’s new Rule 14a-11 granting a federal right of proxy access, USPX members began drafting a model proxy access shareonwer proposal. We are preparing to fight company by company through “private ordering,” just as we fought for “majority voting” for corporate directors. Unlike the failed Rule 14a-11, our proposal will facilitate action not only by large institutional shareowners but also by groups of retail shareowners as well.
Decentralization Key to Future
A challenge the USPX has recognized is the fact that much of our work requires expertise in corporate governance, finance and regulations. We have had some success educating new members in these. A bigger problem has been transitioning new members, as they learned from others, into leaders who could formulate, launch and lead their own projects. For the organization’s entire history, projects have been launched and lead by the same small group of seasoned members.
In June 2011, the USPX convened a meeting of some of its long-term members to discuss this challenge. Members traveled from across America to attend. At that meeting, it was decided that the organization needed to decentralize.
The plan adopted at that meting was to implement a new website and procedures that would enable members to self-organize and initiate their own action on projects. This way, members who had gained some experience in the movement could formulate their own projects, launch them, recruit member-volunteers for help, and lead those projects to fruition.
Critical to this plan was implementation of a new website, with social networking tools, to enable members to network and collaborate. On the new site, members will be able to network, create their own blogs, form groups, engage in discussion forums and more. Additional functionality will continue to be added over time. There’s also a growing “How To” section with several pages introducing members how to use the available tools onsite and how to tie in with tools hosted by others.
The site has been implemented by a team of members, with leadership from the movement’s head of information technology, Kevin Weber. Kevin has done an outstanding job and stands ready to do more as ideas for enhancements roll in from members. Congratulations also go to Glyn Holton, whose writing and dedication has been inspirational. I hope you will explore the publicly accessible portions of the new site and will find the group worth joining. Let’s move from occupying Wall Street to transforming Wall Street.
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