The Corporate Monitoring Newsletter

Issue #17 - January 2004

Written by Mark Latham

IN THIS ISSUE:

1. Three Shareowner Proposals Submitted to Six Companies

2. Stock Voting Leverage Website Development Underway

3. ProxyMatters.com Voting Discussion Website Launched

4. Corporate Monitoring Moved To Canada; New Movie “The Corporation”
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1. THREE SHAREOWNER PROPOSALS SUBMITTED TO SIX COMPANIES

The Corporate Monitoring Project has submitted three shareowner
proposals to six companies for inclusion in their year-2004 proxy
voting forms. These proposals are designed to make shareowner voting
more powerful by using intermediaries that are independent of the
board of directors.

The Proxy Advisor Proposal would let shareowners vote to choose a
proxy advisory firm paid with corporate funds – submitted to USEC [USU]
and Oregon Steel [OS]. By SEC decision (January 14) this will appear
in the USEC proxy.

The Auditor Independence Proposal would have the company’s auditor
selected by competitive shareowner vote rather than by the board’s
audit committee – submitted to HRPT Properties [HRP] and USG
Corporation [USG].

The Voting Leverage Proposal advocates letting shareowners
conveniently imitate institutional investors’ voting decisions –
submitted to Visteon [VC] and Calpine [CPN].

All three proposals are based on the idea that voting by brand
reputation is easier and more effective than voting for directors.
Even if current SEC rule-making brings more competition in director
elections (see Newsletter #16 at www.corpmon.com/newsletter.htm), it
will still be very difficult for shareowners to judge director quality.

See www.corpmon.com for text of proposals, supporting statements and
further info.
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2. STOCK VOTING LEVERAGE WEBSITE DEVELOPMENT UNDERWAY

Development has begun on a website to give individual shareowners a
convenient alternative to following the board of directors’
recommendations on how to vote. Instead, a shareowner could choose to
copy the voting decisions of an institutional investor with a good
reputation for intelligent voting.

This project has been registered at www.sourceforge.net, the web’s
leading open-source software development platform.

By offering automated options like “Vote all my stock the way CalPERS
votes its stock”, this will break the board’s monopoly on providing
convenient voting guidance to individual shareowners. Although boards
are experts on voting issues, their interests often conflict with
those of shareowners, which is why shareowner voting is legally
required for such decisions as director elections and management stock
option plans.

Benefits and potential evolution of this initiative are described in
working paper “Vote Your Stock” at www.corpmon.com/publications.htm
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3. PROXYMATTERS.COM VOTING DISCUSSION WEBSITE LAUNCHED

A new website launched on January 28, which gives institutional and
individual shareowners a forum for discussing proxy voting issues.
ProxyMatters.com users can post their comments and ideas about listed
companies’ proxies for free. Users can also pay for premium placement
of their postings. This website provides a convenient centralized
clearinghouse for investors to exchange ideas on how to vote their
proxies.

ProxyMatters.com could help individual investors vote their proxies
using insights gained from better-informed professionals such as
institutional investors. This would be an important step toward the
convenient brand-voting mechanisms we advocate in our Voting Leverage
Proposal and the paper “Vote Your Stock”.

[The Corporate Monitoring Project and Mark Latham have no commercial
ties with ProxyMatters.com .]
_________________________________________________________________

4. CORPORATE MONITORING MOVED TO CANADA; NEW MOVIE “THE CORPORATION”

The Corporate Monitoring Project has recently moved its headquarters
from San Francisco to Vancouver, Canada – new address and phone number
at the end of this email. We will continue our primary emphasis on
improving corporate governance in the USA, and broaden our focus to
include Canadian companies.

One fortuitous benefit of moving to Vancouver has been seeing a new
documentary film, “The Corporation”, which recently opened in several
Canadian cities and at the Sundance Film Festival in Utah. It
features commentary from such diverse voices as Robert Monks, Milton
Friedman, Noam Chomsky, Michael Moore and Naomi Klein. See
www.thecorporation.tv, especially the “Product Demos” link which has
clips, photos and quotes.

Compared to many views expressed in the film, I am much more
optimistic about the potential for improving the social impact of
corporations -- primarily by increasing the power of shareowners,
since diversified shareowners have a greater incentive than CEOs to
balance profit with social goals. The reason for this are presented
in “Democracy and Infomediaries” (at www.corpmon.com/publications.htm),
section 4 entitled “From corporate governance to politics.”

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