Posted on 02/26/2008 12:17:26 PM PST by BGHater
WASHINGTON -(Dow Jones)- A tiny free-enterprise fund wants Exxon Mobil Corp. (XOM) and Charles Schwab & Co. (SCH) shareholders to consider banning advisory proposals favored by activist stockholders it views as a nuisance.
Advisory or "precatory" proposals aren't binding on companies, but they are a popular vehicle for shareholders to express their views on issues from climate change to executive compensation.
The Free Enterprise Action Fund (FEAOX), based in Bethesda, Md., is seeking to close off that option and has filed proposals with Exxon Mobil and Schwab targeting what it calls "nuisance shareholders."
Specifically, the fund wants shareholders at both companies to vote this year on amending the companies' bylaws to preclude shareholders from offering non-binding proposals in the future.
"Shareholder proposals have simply become a way to harass companies," said Steven Milloy, co-head of the $11.5 million Free Enterprise Action Fund.
Labor unions, environmental groups and socially conscious investors supply the vast majority of non-binding shareholder proposals, and "we don't consider them real shareholders," Milloy said in a telephone interview Friday.
"They just use these proposals to gain influence over the companies," said Milloy. "We'd like to see that stuff go away."
Exxon Mobil faces dozens of "nuisance" proposals from shareholders each year, said Milloy. He added that Schwab has been "besieged" by labor unions because the online brokerage firm's chief executive, Charles Schwab, supported the Bush administration's call for Social Security reform.
Companies ought to close the door on "nuisance" shareholders now, because if a Democrat is elected president, it all but ensures the Securities and Exchange Commission will favor increasing shareholders rights, not decreasing them, Milloy asserted.
Milloy said he made those arguments on a conference call last month with Exxon Mobil officials, but wonders if the oil giant is intimidated enough by "nuisance shareholders" that it might recommend against adoption of the "nuisance shareholder" proposal.
Conversely, if Exxon Mobil and Schwab recommend that shareholders vote for the proposal, Milloy predicts it will be adopted.
"We have received it and the board is considering it," said Exxon Mobil spokesman Gantt Walton. He declined to comment on the board's views before the company releases its proxy materials in April. Exxon Mobil typically holds its annual meeting in late May, although it has yet to announce a date for its 2008 meeting.
Schwab expects to send proxies in late March in advance of its meeting in May, according to spokesman Greg Gable. He confirmed the company had received the "nuisance shareholder" proposal but declined to comment further.
Labor officials, for their part, see plenty of merit in advisory-only proposals.
"Precatory proposals are the means by which shareholders raise a lot of important governance ideas, including classified boards and executive pay proposals," said AFL-CIO associate general counsel Damon Silvers.
While Milloy has been affiliated in the past with think tanks and non-profits that received funding from Exxon Mobil, he said he no longer has any financial connection to the company aside from being a shareholder.
Milloy acknowledges that the "nuisance" label could easily be attached to him since his fund hasn't been shy about filing its own shareholder proposals, including calling for companies to explain why their activism on climate change benefits shareholders.
"In a perfect world, we wouldn't exist," said Milloy. Until then, he added, "you've got to fight fire with fire."
-By Judith Burns, Dow Jones Newswires; 202-862-6692; Judith.Burns@dowjones.com
I’m surprised XOM doesn’t have a better dividend yield with the profit they are making. I don’t see their profit growing a heck of a lot unless oil somehow soars well above $100 a barrel so increasing their dividend should help make the stock look attractive with relatively flat earnings per share.
...this works even better with Phillip Morris beginning after World War II.
Yes the dividend needs to come up. It’s just amazing the compounding effect if you reinvest the divs. Wish I had started these drips 30 yrs ago instead of 15.
...factor in dividends it really gets mind blowing!
Was going to set up the drip but noticed the spinoff of PMI. Think I should wait until that’s done? Do you think that will have a drip program of it’s own?
I’d set it up; either way long term I think it will pay well. Only my opinion though.
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