The Corporate Monitoring Newsletter

Issue #14 - May 2002

Written by Mark Latham

IN THIS ISSUE:

1. Proxy Advisor Proposal Submitted to USEC and A. Schulman

2. SEC Allows Management to Omit Auditor Independence Proposal

3. Corporate Monitoring Could Start Anywhere
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1. PROXY ADVISOR PROPOSAL SUBMITTED TO USEC AND A. SCHULMAN

On May 15, 2002, I submitted identical proposals to USEC and to A. Schulman, requesting that shareowners vote to choose an independent proxy voting advisor paid with corporate funds. This has been the main proposal of the Corporate Monitoring Project since 1999. Depending on management arguments, my responses, and SEC decisions, these proposals may appear in the company proxies for shareowner vote later this year.

Text of proposals --
www.corpmon.com/ProxyAdvisor-USU.htm
www.corpmon.com/ProxyAdvisor-SHLM.htm

Previous proposals --
www.corpmon.com/ProposalSubmissions.htm
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2. SEC ALLOWS MANAGEMENT TO OMIT AUDITOR INDEPENDENCE PROPOSAL

On April 24, 2002, the SEC Division of Corporate Finance issued a "no-action" letter allowing the management of Fleetwood Enterprises to omit my shareowner proposal from their 2002 proxy. The proposal called for auditor selection by shareowner vote --
www.corpmon.com/AudInd-FLE.htm

In spite of the Enron debacle, the SEC continues to view auditor selection as an "ordinary business" decision that shareowners should not consider undertaking. They were not persuaded by my arguments that "It is much easier to assess reputations of auditors than of board members, because there are only a handful of auditing firms, versus hundreds of board candidates for a diversified portfolio of stocks over the years" and "Stricter regulation of auditors can not solve the whole problem. A market for auditor reputation (which my Proposal would permit) could contribute to raising quality standards."

Fleetwood management’s arguments, my responses and the SEC letter are available at www.corpmon.com
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3. CORPORATE MONITORING COULD START ANYWHERE

Our proxy advisor proposal has not yet been implemented anywhere. It need only be tried at a few companies, and if it works it can then spread to other companies, other countries, and even to civic politics. Such developments are outlined in my paper "Democracy and Infomediaries" (www.corpmon.com/Democracy.htm).

I will be overseas for most of the coming year, seeking opportunities to implement the proposal. Approximate itinerary:

Milan -- ICGN Conference (www.icgn.org) -- July 10-12, 2002

Beijing -- September-October 2002

Hong Kong & Taiwan -- November 2002 - January 2003

Tokyo -- February-March 2003

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