The Association of U S West Retirees



Activist Holders Gain Ground In Quest for Access to Ballots
By Kara Scannell
The Wall Street Journal
Tuesday, January 23, 2007

WASHINGTON -- Shareholder activists won a modest victory in their efforts to win greater access to corporate ballots.

Yesterday, the Securities and Exchange Commission declined to back Hewlett-Packard Co.'s attempt to block a closely watched shareholder resolution.

A September ruling by the U.S. appeals court in New York upended the long-held position of corporations to disallow shareholder proposals that relate to elections of directors on the ballot.  The SEC had backed this view, saying that elections were a matter of state law.  But the court tossed the issue to the SEC, saying the agency needed to clarify its interpretation.

Corporations had hoped the SEC would adopt a rule that would make it difficult for shareholders to amend the bylaws of a corporation to make it easier to put shareholder-backed nominees on corporate ballots.

The SEC, though, has repeatedly punted on the issue, reflecting disagreement among commissioners about how much access to give shareholders.  Yesterday, in declining to weigh in on the H-P case, it said it had no opinion on the matter and wouldn't take up the broader issue of shareholder access later this month, as had been expected.

"I think it will allow the parties to work it out themselves and also allow the commission to continue to study the matter and see if we can't get more of a consensus on a mechanism to improve shareholder access to the proxy," said Roel Campos, a Democrat on the five-member commission.

In the meantime, shareholder groups are likely to take advantage of the lack of guidance from the SEC.  "It gives a green light to shareholders to file other proposals and for those that have been filed to move forward," said Richard Ferlauto, director of pensions and benefits policy at the American Federation of State, County and Municipal Employees, which filed the resolution at H-P.

If H-P doesn't include the resolution in its proxy, Mr. Ferlauto said he is "committed to litigation."  H-P, which has scheduled its annual meeting for March, declined to comment on whether it would include the resolution in its proxy.

Business groups were disappointed in the SEC's failure to act.  "It's going to perpetuate uncertainty for companies in how to deal with these proposals when they're filed in the future," said Thomas Lehner, director of public policy at the Business Roundtable.

--Christopher Lawton contributed to this article.

Write to Kara Scannell at