International Business Machines Corp. (NYSE:IBM) and 3M Co (NYSE:MMM) aren’t the only tech companies that want to limit shareholder access to their company proxy. Last year, Dell Inc. (NASDAQ:DELL) moved to exclude a shareholder proposal calling for Dell Inc. (NASDAQ:DELL) to list some shareholder-nominated directors on the proxy. The company argued that the shareholder proposal was “vague and indefinite” because, while it referred to the eligibility requirements in the SEC rule calling for greater proxy access, it failed to repeat those requirements explicitly.
In other words, if Dell Inc. (NASDAQ:DELL) were open to allowing shareholders to vote on this issue, this would have been an easy fix — they just could have included a description of the SEC’s eligibility requirements. Instead, the company chose to exploit a technicality that allowed it to avoid giving shareholders a say on the matter.
In contrast, Hewlett-Packard Company (NYSE:HPQ) recently granted shareholders the right to list their director nominees on the proxy. HP’s board even recommended that shareholders vote for the proposal calling for that change. Typically, boards recommend that shareholders vote against such shareholder proposals.
The Foolish bottom line
While the abandonment of fiduciary duties in favor of narrow special interests should worry investors, this worry does not go away by limiting shareholders’ ability to nominate directors. Rather, it exacerbates the problem by filling corporate boards with directors who are loyal to the narrow group that selected them — company insiders whose interests sometimes diverge from shareholders’ at large.
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool’s free report “3 Stocks That Will Help You Retire Rich” names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
The article These Tech Companies Don’t Want Your Voice on the Board originally appeared on Fool.com and is written by M. Joy Hayes.
Motley Fool contributor M. Joy Hayes, Ph.D. is the Principal at ethics consulting firm Courageous Ethics. She has no position in any stocks mentioned. Follow @JoyofEthics on Twitter. The Motley Fool recommends 3M, owns shares of IBM, and has options on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
