October 29, 2007

For Those Doing E-Proxy: A Sample Affidavit of Distribution

Much thanks to independent election inspector Carl Hagberg, who created a Sample Affidavit of Distribution in Word (that we have posted in our “E-Proxy” Practice Area). This Affidavit can serve as a quasi-checklist of all the things that need to be done to ensure that all classes of shareholders will be covered for those using voluntary e-proxy. It’s a draft sample – any comments are welcome by Carl or myself!

The Latest E-Proxy Examples

I’ve got e-proxy on the mind as I prepare to talk about the topic during the Association of Corporate Counsel’s annual conference in Chicago. With nearly 30 companies trying voluntary e-proxy so far, certain trends are becoming evident – some of these will be discussed during our upcoming November 15th webcast: “Annual Reports: How to Create Them for an Online World.”

Taking a quick swing through the IR web pages of some of those companies doing e-proxy reveals that many of them explain very little to shareholders about what they are doing. Not only is that not fair to shareholders in my opinion, that will not help the company reach quorum.

Here are examples of what some larger companies are doing online to explain e-proxy to shareholders:

– Sun Microsystems issued a press release announcing it is using voluntary e-proxy. Sun’s page about it’s annual reports also explains that it is using e-proxy. So far, this is the best online communication to shareholders I’ve seen.

– SaraLee has two “Order Hardcopy” buttons on its annual meeting web page.

– Nike posted this page that explains e-proxy – the link to this page is called “Electronic Delivery of Shareholder Materials,” in contrast to SaraLee’s “Order Hardcopy.”

– Microsoft does something similar to Nike if you scroll down a little on this page (except I can’t seem to get into that page as the link goes to a .docx file, which is the latest Word format that not many folks have yet – fyi, Microsoft has posted a compatibility pack for XP and 2003 versions of Word, Excel and PowerPoint that allows them to open and read the newest file formats).

Some other companies really confused me – their IR web pages said they are collecting consents for e-delivery; yet their proxy materials indicate they are using e-proxy. Of course, they could be doing both – but if so, they should explain that when they solicit consents.

As many more voluntary e-proxy’ers are expected as we near the calendar year-end, we hopefully will see some more descriptive explanations of what companies are doing – shoot me an email if you see something innovative. I’ll continue to post examples of what companies are doing in our “E-Proxy” Practice Area.

Twenty Years: The ’87 Market Break

This recent NY Times column gave me a chuckle. Joe Nocera recounts where he was when the market sliced 23% off the S&P 500 in a day (do the math to figure out what that means in today’s terms – the Dow dropping 3500 points in a day! About 10x the drop that happened on October 19th this year).

I had a similar flashback because I was on a law school field trip that day, visiting the Philadelphia Stock Exchange. The President of the Exchange was showing us around and began to cry because of the millions he was losing as he talked. Given that I worked at a sandwich shop in addition to a clerkship to make ends meet, I wasn’t moved much – but it still was quite a sight (and I’m sure he made it all back within a few weeks).

A year later, I started my first attorney job as a novice examiner in Corp Fin – and within two weeks of my start date, the SEC held a huge keg party at a local bar to celebrate the anniversary of the market break. That sure don’t happen anymore..

– Broc Romanek