Tag Archives | Intel

Intel Proxy Voting Recommendations

Intel Corporation (INTC), designs, manufactures, and sells computer, networking, data storage, and communication platforms worldwide. Most shareholders do not vote because reading through 100+ pages of the proxy is not worth the time for the small difference your vote will make. Below, I tell you how I am voting and why. If you have read these posts related to my portfolio for the last 22 years, have values aligned with mine, and trust my judgment (or you don’t want to take the time to read it), go immediately to see how I voted my ballot. Voting will take you only a minute or two and every vote counts. The annual meeting is coming up on May 17, 2018. I voted with the Board’s recommendations 53% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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Update on Virtual Shareowner Meetings

As they have done for the past few years, Intel Corp. hosted a hybrid shareowner meeting today, allowing shareowners to attend in person or via the Internet. This meeting was important because Intel had planned to make it a virtual meeting, hosted exclusively on the Internet. A strong reaction from shareowners prompted Intel to back down for this year, but this may be just a one-year reprieve. As the same technology used for today’s hybrid meeting would be used for an exclusively virtual meeting, we had today a glimpse of what a virtual Intel meeting might be like. (see Intel Virtual Mtg Out for 2010 But Exploring Future with USPX)

Broadridge provided the technology, and the meeting was hosted on a Broadridge website. Shareowners accessed the meeting using the same 12-digit control numbers they use to vote shares on-line through Broadridge’s proxyvote.com website. Since it is unclear how a competing technology provider might authenticate sharewoners, Broadridge is poised to monopolize the market for virtual—and even hybrid—shareowner meetings.

In the days leading up to the Intel meeting, shareowners were welcome to post questions to an “Investor Network” website that is in beta testing by Broadridge. Many questions were posted and Intel staff answered a number of them on that same website prior to the meeting. Intel represents that questions posed over the Internet during the meeting, if not answered during the meeting, will be answered on that website. The process appears manual. I tested the system by posting a question during the meeting. It was not answered during the meeting, and an hour after the meeting, it had not appeared on the Investor Network website.

The meeting itself was a typical shareowners meeting. It lasted just 40 minutes, with the chair and CEO fielding questions while the polls were open. It was professionally run and actually one of the better shareowner meetings I have recently participated in. Despite the availability of access via the Internet, about twenty-five shareowners attended in person. Many corporations that don’t offer Internet access fail to get that number.

Questions from the audience were mostly interesting. Two individuals praised the hybrid format while arguing that an all-virtual meeting would not be good for shareowners. In response, chair Jane Shaw said no plans have been finalized as to whether Intel will go all-virtual in 2011 “or beyond.” She declined to endorse criticisms of an all-virtual format, which suggests there is still interest in going all-virtual.

As feared, Broadridge’s technology largely reduces shareowners to a spectator role. I routinely speak out at shareowner meetings, sometimes to ask questions, but also to address procedural errors by the chair, which are common. No such opportunity existed with Intel’s meeting today. You can shout at your computer screen, but it won’t do any good. The user interface is dominated by a small video of the meeting. There are links to the proxy materials, meeting rules and a few other documentations. You can click on a button to fill in your ballot at any time during the meeting up until the polls close. There is also a small window for typing in a question. The brevity of the meeting and the fact that the chair appeared to read Internet questions from a sheet of paper suggest that Internet questions were pre-selected from questions submitted in advance of the meeting. In summary, there appears to have been no means for shareowners participating via the web to participate during the meeting. Other than filling out the ballot, our role was entirely passive. Neither before, during nor after the meeting was there any mechanism for shareowner-to-shareowner communication.

Needless to say, there will need to be improvement before shareowners can support corporations in hosting all-virtual meetings. The United States Proxy Exchange (USPX) is spearheading shareowners’ response to the opportunities and risks virtual or hybrid meetings pose. We will be hosting a deliberative conference this November in Boston at which shareowners will set guidelines for the conduct of virtual meetings. Intel has already committed to participate in that conference, and I invite all institutional and retail shareowners to join us as well. Details about the conference will be announced in a few weeks. To receive that announcement, please e-mail me at mailto:[email protected].

(Publisher’s note: Thanks to Glyn Holton for this guest commentary and for his good work at the USPX. Guest posts on substantive corporate governance issues are always welcome. Contact James McRitchie.)

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Fiduciary Duty for Sustainability

The nation’s largest private water utility company has joined a federal lawsuit that aims to force the manufacturer of atrazine, a widely-used herbicide, to pay for its removal from drinking water. The class action lawsuit was filed in U.S. District Court for the Southern District of Illinois alleging that Syngenta, Inc. made billions of dollars selling atrazine while local taxpayers were left “the ever-growing bill for filtering the toxic product from the public’s drinking water.” (Nation’s Largest Private Water Utility Joins Lawsuit Against Herbicide Maker, Common Dreams, 3/31/10) Governance questions:

  • Will the fact that EPA registered atrazine provide adequate legal protection?
  • Did Syngenta’s board fully consider the risk of such lawsuits?
  • What about your company’s products and board?

In a related story, Harrington Investments, Inc. (HII) announced that Intel agreed to amend the Charter of their Corporate Governance and Nominating Committee to include “corporate responsibility and sustainability performance.” Intel also provided Harrington with an outside legal opinion stating that under Delaware Law, directors have a fiduciary duty to address corporate responsibility and sustainability performance as specified in the committee charter. Said John Harrington:

Intel has acknowledged in their committee charter, that directors must take into consideration corporate responsibility and sustainability performance, including long and short term trends and impacts on Intel’s business, as part of their fiduciary duty. This is a major victory for advocates of corporate responsibility and environmental sustainability, and others who strongly believe that these issues are essential in recognizing directors’ and officers’ fiduciary duty.

For the second year, Harrington Investments introduced a shareholder resolution to amend Intel’s bylaws to create a Board Committee on Sustainability. Intel initially opposed the resolution but then engaged in a dialogue with HII. This resulted in Intel agreeing to change their corporate charter to require the Governance and Nominating Committee to:

review(s) and report(s) to the Board on a periodic basis with regards to matters of corporate responsibility and sustainability performance, including potential long and short term trends and impacts to our business of environmental, social and governance issues, including the company’s public reporting on these topics.

Intel also had their outside legal counsel Gibson, Dunn & Crutcher LLP write a legal opinion specifically stating that pursuant to Delaware law, corporate responsibility and sustainability reporting based upon the committee’s charter, was part of the fiduciary duty of company directors. With this agreement in hand, HII agreed to withdraw its bylaw amendment resolution. Harrington concluded by saying,

I am very appreciative of the work put in by Irving Gomez, Intel Shareholder Relations and Cary Clafter, Intel Corporate Secretary, on this very progressive change in Intel’s Committee Charter. It will be of great assistant in moving forward with other corporations in our efforts to get corporate management to recognize that corporate social responsibility, including environmental sustainability and human rights, is an integral part of directors’ and officers’ fiduciary duty.

Harrington Investments, Inc. is a 28 year-old Napa, California-based socially responsible investment advisory firm that manages assets of individual and institutional investors requiring social and environmental as well as financial portfolio performance. Harrington utilizes a comprehensive social and environmental screen, commits clients’ assets to community investing and engages in shareholder advocacy, recently introducing shareholder resolutions specifically on U.S. economic security, corporate governance, CEO compensation and advancing human rights and sustainability as part of corporate officers’ fiduciary duties.

See also, Don’t Ask, Don’t Tell: A Poor Framework for Risk Analysis by Both Investors and Directors, HLS Corpgov and Financial Regulation blog, 11/15/09), Is Responsible Investing a Must, or a Should? UNEP FI on Fiduciary Responsibility, RMG blog, 7/24/09), and How companies manage sustainability: McKinsey Global Survey results, 3/2010.

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Intel Virtual Mtg Out for 2010 But Exploring Future with USPX

Bowing to shareowner concerns, Intel Corp. scrapped plans to hold an exclusively on-line virtual annual meeting in 2010 and is likely to participate in a Fall conference to establish safeguards for the conduct of virtual meetings in the future, the United States Proxy Exchange (USPX) announced today.

Background

Last Fall, Intel Corp. announced plans to scrap its annual shareowner meeting for 2010 and host an on-line forum in its place. In 2000, Delaware enacted legislation allowing corporations to do exactly this. Sadly, that state’s legislators granted shareowners no say in the matter, leaving the decision solely to the discretion of corporate boards.

Broadridge Financial Services has developed software for the conduct of virtual meetings. A handful of smaller corporations have already adopted that software and switched to entirely virtual meetings. For a number of years, Intel has held hybrid shareholder meetings, allowing people to attend both in person or via the Internet. Their plan had been to go to an all virtual meeting in 2010.

There is every reason to believe that, with strong safeguards, virtual shareowner meetings could enhance shareholder participation in meetings while protecting—even restoring— shareowner rights that have atrophied over the decades. However, no such safeguards are in place. Here are just a few scenarios illustrating how virtual meetings will deprive shareowners:

  1. A well known shareowner activist plans to ask some pointed questions at the shareholder meeting, but his connection to the meeting somehow fails. He is left wondering if he was targeted or if there truly was an honest technical problem.
  2. A shareowner wants to challenge the chair’s conduct of the meeting with a point of order. She is within her rights to do so and may interrupt the chair for this purpose, but she finds that the electronic forum software won’t allow her to do so ….. one more shareholder right lost.
  3. A shareowner wants to make a floor amendment, but the software doesn’t allow that either.
  4. The meeting software provides no means of group communication, such as applause of booing, so shareowners come away from meetings with no sense of how other shareholders felt.
  5. Corporate executives decide to pre-record their comments for a virtual shareowner meeting, including answers to pre-selected “shareowner questions.” The executives then don’t bother logging in during the actual “meeting.”

Most annual meetings are heavily scripted. The chance for real interaction often comes in informal encounters before and after the formal meeting. Those opportunities would also be gone with virtual meetings.

Formation of the Coalition to Preserve Shareowner Meetings

Following the announcement by Intel, shareowners discussed what might be an appropriate response to virtual shareholder meetings. Intel was the first major corporation to announce plans to switch to a virtual meeting, and more corporations were likely to follow suit. Without safeguards in place to protect shareholder rights, the situation was critical. There were few attractive options.

The SEC would be unlikely to intervene to preempt a Delaware law. We could launch a withhold vote campaign against the directors of Intel and other corporations that host electronic-only meetings, but that would entail participating in—and thereby accepting as legitimate—the virtual meetings.

In November, the USPX announced it was exploring a two-pronged strategy to address the issue of virtual shareowner meetings:

  1. Host a conference in the Fall of 2010 to develop safeguards that would allow virtual meetings to be held in a manner that protects shareowner rights, and
  2. Organize a withhold proxy campaign against corporations holding virtual meetings without safeguards.

Since that announcement, USPX has made considerable progress on both aspects of the initiative. A formal announcement of the formation of a Coalition to Preserve Shareholder Meetings is expected shortly. That announcement will include details on the Fall conference.

Conclusion

“The United States Proxy Exchange applauds Intel’s decision to postpone implementing of virtual shareholder meetings until after the Fall conference. We welcome all parties— investors, shareowner advocates and service providers—to join the Coalition to Preserve Shareholder Meetings and participate in the Fall conference, said Glyn Holton.

Interested parties should contact USPX Executive Director Glyn A. Holton at 617.945.2484 or [email protected]. See also, Intel Yields on Virtual Meeting, 1/20/10. I hope to be at this conference myself and urge others to join us.

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Intel Yields on Virtual Meeting

From a IntelOurPublicStatementRegardingVirtualMeeting: “In the fall of 2009 Intel indicated it was going to attempt an experiment and hold its’ 2010 stockholders meeting entirely on the web, moving from a physical annual meeting to a virtual meeting.

A number of shareholders expressed support for the expansion of the annual meeting via the web, but voiced concerns about the elimination of the physical meeting and the lack of accountability of the Board and top management if there was no physical meeting with in-person interaction possible.  This would be particularly true if stockholder resolutions were being presented or probing questions asked of Board members.

Intel discussed this issue with investors seeking advice on ways to make the virtual meeting as fair and transparent as possible and also discussed concerns about the downside of eliminating the physical meeting.

Concerned investors wrote letters, talked to management and several actually filed a shareholder proposal urging a continuation of physical stockholder meetings.

After deliberation, in January Intel reported to concerned investors that they had decided to continue to hold a physical annual meeting in 2010 and were putting aside the virtual only meeting.

Investors led by Walden Asset Management and United for a Fair Economy (UFE) commended Intel and UFE withdrew the shareholder resolution on the issue. A UFE member had filed the resolution along with Walden clients.

They indicated support for creative expanded virtual access to the stockholders meeting stressing it must be combined with an in-person meeting.

In addition, two other resolutions were withdrawn after discussions with Intel, one asking for increased transparency on succession planning and the other on Board diversity.”

We congratulate Timothy Smith and others involved in these negotiations. Intel made made the right decision. Another important factor in Intel’s decision many have been a threatened “withhold proxy campaign,” from the Investor Suffrage Movement.   (see our prior coverage, Guest Commentary From Glyn Holton: Emergency at Intel, 12/2/09) That group is planning to hold a conference later this year to discuss what safeguards are necessary before they would consider endorsing virtual shareowner meetings. Intel has agreed to participate in that upcoming conference.

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Guest Commentary From Glyn Holton: Emergency at Intel

Intel Corp. recently announced they will no longer hold annual shareholder meetings. Instead, they plan to host shareholder forums, or “virtual shareholder meetings.” In 2000, Delaware enacted legislation allowing corporations to do exactly this. Arrogantly, that state’s legislators granted shareholders no say in the matter, leaving the decision solely to the discretion of corporation’s entrenched boards.

There is every reason to believe that, with strong safeguards, virtual shareholder meetings could enhance shareholder participation in meetings while protecting—even restoring—shareholder rights that have atrophied over the decades. However, no such safeguards are in place. Intel and other smaller corporations are taking a go-it-alone approach, forcing virtual shareholder meetings on unhappy shareholders. After Delaware changed its laws, the Council of Institutional Investors wrote the CEOs of all Delaware corporations asking them not to conduct virtual meetings. Unions have expressed concerns. Walden Asset Management has encouraged shareholders to write letters to Intel.

Here are just a few scenarios illustrating how virtual meetings will deprive shareholders:

  1. A well known shareholder activist plans to ask some pointed questions at the shareholder meeting, but his connection to the meeting somehow fails. He is left wondering if he was targeted or if there truly was an honest technical problem.
  2. A shareholder wants to challenge the chair’s conduct of the meeting with a point of order. She is within her rights to do so and may interrupt the chair for this purpose, but she finds that the electronic forum software won’t allow her to do so ….. one more shareholder right lost.
  3. A shareholder wants to make a floor amendment, but the software doesn’t allow that either.
  4. The meeting software provides no means of group communication, such as applause of booing, so shareholders come away from meetings with no sense of how other shareholders felt.
  5. Corporate executives decide to pre-record their comments for a virtual shareholder meeting, including answers to pre-selected “shareholder questions.” The executives then don’t bother logging in during the actual “meeting.”

Most annual meetings are heavily scripted. The chance for real interaction often comes in informal encounters before and after the formal meeting. Those opportunities will also be gone with virtual meetings.

Shareholders have been discussing what might be an appropriate response to Intel’s move, but there are few attractive options. The SEC will not intervene to preempt a Delaware law. We could launch a withhold vote campaign against the directors of Intel and other corporations that host electronic-only meetings. That would entail participating in—and thereby accepting as legitimate—the virtual meetings.

We reject Delaware’s law in the same way abolitionists rejected the Supreme Court’s Dred Scott decision in 1857. A corporation that doesn’t hold shareholder meetings is dead in the same way that a human being that doesn’t breathe is dead. Putting up a website and calling it a “meeting” doesn’t change that.

This is a crisis because the problem is going to spread. Working with Jim McRitchie of CorpGov.netand other interested parties, the United States Proxy Exchange (USPX) is exploring whether to launch a withhold proxy campaign against Intel and other corporations that adopt electronic-only meetings. Under such a campaign, shareholders would refuse to participate in those “meetings” on the grounds that they are illegitimate. Shareholders would withhold their proxies. If enough did so, offending corporations would fail to achieve quorum. Because retail brokers will vote “routine” matters, such as management sponsored resolutions, it won’t be enough for investors to not return their proxy materials. They will have to explicitly ask their broker to withhold a proxy on their behalf.

If we decide to proceed with a withhold proxy campaign, we will implement a web portal through which institutional and retail shareholders may join the campaign and coordinate their activities. At this early stage, please e-mail Glyn Holton to express support or ask questions. We will then keep you informed of developments.

Note from CorpGov.net publisher: See also virtual meetings Virtual Shareholder Meetings by Elizabeth Boros. The USPX aims to be a chamber of commerce, representing the legitimate interests of shareholders and is in the process of getting 501(c)(6) status with the Internal Revenue Code. The board set dues at $9 a month. Membership benefits include advocacy, web-based resources, and a magazine to be launched this Spring. Step up to the plate and e-mail Glyn Holton to become a member.

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