Dishfan re shareholder proposals
I did have the SEC rule 14a-8 in front of me when I wrote the first preliminary draft of shareholder proposals. However, I overlooked the part that you bolded. Therefore in any subsequent revision of shareholder proposals, the language will need to be changed to include words like recommend, request, suggest, or consider. The beginning phrase "It is recommended that" could easily start each shareholder proposal. You appear to be correct on this matter.
I was aware that each proposal and corresponding justification could not exceed 500 words, that a given shareholder could only submit one proposal per year, that the shareholder who submits a proposal included in the proxy has to be present at the ASM, that the submitting shareholder must own at least $2,000 market value of the company stock for at least a year, and some of the other SEC requirements for making shareholder proposals. Therefore if several shareholder proposals are to be officially submitted to IDCC for proxy consideration for next year, then it will have to be a group effort involving at least as many shareholders as the number of submitted proposals.
The first rough draft of shareholder proposals reposted as follows:
Posted by: rmarchma
In reply to: Learning2vest who wrote msg# 20230 Date:4/19/2003 1:33:46 PM
Post #of 20324
L2vest re “Don Quixote” and shareholder proposals/activism
No the "Don Quixote" is not out of my system yet. I still think that shareholders should have a more active voice in the companies they own. I still think that some things can be significantly improved at IDCC. I still expect management to execute and to demonstrate a true fiduciary responsibility to the outside shareholders. I will continue to strive to get IDCC’s management to change some their “ways” for what I perceive to be the betterment of the outside shareholder. At times a feel like I fight almost alone, at times I feel that others are fighting along side me.
At the present time, there are some of us who MAY pursue getting shareholder proposals before the stockholders by the time of next year’s proxies, if certain things are not voluntarily changed at IDCC. A preliminary rough draft of some shareholder proposals as follows:
Shareholders propose:
1. That IDCC's stock option grants, stock warrant grants, and restricted stock grants be limited in total to no more than 1.5% (.015) of the outstanding shares per year. That at least half of the yearly stock option grants and warrants be awarded to productive non-insider employees at IDCC.
Stock option grants and warrants are coming under increasing public scrutiny and causing more public outrage against their use. Accounting changes involving expensing stock option grants are rapidly being implemented, which will cause reductions in reported earnings for those companies granting stock options. Therefore granting stock options will have a “double negative” affect upon earnings per share and the resulting stock price. The Net Income will be reduced by expensing options, and the number of diluted shares outstanding will be increased. IDCC needs to be at the forefront in significantly restraining the use of employee and director stock options, warrants, and restricted stock for the ultimate benefit of the outside shareholders. Any stock grants should be equitably distributed among all productive employees within the organization. The majority of stock grants should not go just to the insiders.
2. That IDCC’s insider selling be limited to 10b5-1 trading plans once a year at a predetermined time, and completely eliminate discretionary insider selling with two exceptions. The exceptions which would allow discretionary insider selling to include an unexpected hardship in an insider’s personal financial situation, or any stock acquired by the insider at the prevailing market price with no additional/special rights thereon. If the insider desires an exception to discretionary insider selling due to unforeseen financial hardship, then a written request and approval by the majority of the Board of Directors will be required.
Significant discretionary insider selling tends to have a negative impact upon the company’s stock price and image. The extent of the negative impact can range from minor to very significant depending upon many factors. Discretionary insider selling can create appearances of trading on undisclosed inside information in the hindsight of subsequent events, and could possibly even trigger lawsuits. Windows of opportunity for discretionary insider selling might be few and far between, which could create frustrations associated with the company stock becoming illiquid to the insiders. Predetermined 10b5-1 trading plans allow insiders to sell, even if they possess undisclosed material information, and without the negative repercussions in the investment community normally associated with discretionary insider selling.
3. That IDCC's current Board of Directors be expanded by at least one more new outside director, and specifically designated as the "Shareholder Advocate" director. That this designated director be a significant long-term shareholder of IDCC of at least five years with a minimum ownership of 50,000 shares and possess significant business experience and acumen. That the shareholder advocate director will be charged with fostering a more "shareholder friendly" environment at IDCC including improving shareholder communications, disclosures, relationships, and fiduciary responsibilities to outside shareholders, among others duties. That these aforementioned shareholder improvements be based upon recommendations from independent outside consulting experts in these areas and be made available upon request.
In this age of stockholder skepticism and frustration over corporate governance, the inclusion of a designated “shareholder advocate” director should be viewed as being positive, proactive, and progressive in today’s business environment. Shareholders need to know beyond any doubt that insiders have the outside shareholders best interests at heart in all decisions. A director that comes from the ranks of the long-term IDCC investors, backed-up with significant investment of personal funds in the company stock, will add immediate credibility to this position and effort.
4. That IDCC's compensation committee be expanded from two to include at least one more outside directors, such as the new "shareholder advocate" director, if approved. The Chairman of the Board be taken off this committee due to possible appearances of conflict of interest and concentration of power. The compensation packages of each company officer and each board member be reviewed for reasonableness when compared to a large sampling of comparable size/type companies based upon a new independent study by an outside firm with compensation evaluation expertise.
The Chairman of IDCC’s Board of Directors is not truly independent in that he actively participates in much of the ongoing decisions at IDCC. A very active board chairman has an “appearance” of being able to buy loyalty and power by exerting control over the compensation of all the company’s officers and directors. Therefore it is best that the Chairman of IDCC's Board of Directors not be on the compensation committee. Officer and director compensation at IDCC should not be significantly more than the average compensations of small technological companies, comparable in market capitalization and/or annual revenues to IDCC, unless there is clear and documented justification for doing so. This compensation study and sampling should be fully documented and non-confidential excerpts should be made available upon request.
5. That IDCC change the state of incorporation from Pennsylvania, and reincorporate in Delaware.
Pennsylvania incorporation laws are not nearly as "shareholder friendly" as other states such as Delaware. Fiduciary responsibility to the outside shareholders is not the primary corporate consideration under Pennsylvania incorporation laws as it is in most all the other states. Therefore IDCC's outside shareholders will be much better served by IDCC reincorporating in Delaware. IDCC's wholly owned licensing subsidiary corporation, ITC, is already incorporated in Delaware.
AI
