A few days ago, I wrote about the brouhaha that has erupted over Symantec Corporation’s plan to hold an online-only shareholder meeting on September 20th. The U.S. Proxy Exchange and CorpGov.net have taken exception to Symantec’s plan to hold it’s meeting only on the Internet, suggesting that this effort is an affront to important shareholder rights.

As was noted in its post on the subject, CorpGov.net’s James McRitchie wrote, “[s]ome investors have expressed concerns that virtual-only meetings would deprive them of the opportunity to meet with company representatives face to face. They believe that physical meetings allow investors to better express their positions – and that management and the board listen more closely when communications are made in person.’

If the primary purpose of attending a shareholder meeting is to confront company executives face-to-face and to engage in a bit of verbal jousting, then by all means, fight the good fight and get executives to see the light and stay with in-person meetings. But is that what investors actually want from an annual meeting?

Let’s review the annual meeting process for a moment.

An annual meeting is convened to consider management and shareholder proposals and allow for both company representatives and shareholders to engage in a presentation of views about matters pertaining to the corporation. To suggest that the parties engage in a discussion is a bit of an overstatement as most executives simply try to get through the process as quickly as possible while shareholders either read their proposals that have already been published in the company proxy statement or raise issues of concern to them. The proxies ballots have already been tabulated and the company representatives already know where things lie. On occasion, the meeting becomes a forum for Shareholder Theater where the wrongs of the company are put on full display. An hour ort so later, everybody goes home.

The virtual shareholder meeting is a game changer. What it does is remove the human element from this process. Indeed, it enables wily CEOs to avoid one of the few times they have to go mano-a-mano with the company’s owners. More importantly, it forces investors to develop meaningful strategies for expressing their views and influence the annual meeting process.

As I have noted in a number of previous posts on this subject, the annual meeting process has devolved into a form of Kabuki Theater, a drama in which the outcome is already determined before the play begins. Taking this process off the table forces shareholders to engage in creative forms of engagement, which they have largely failed to do.

Let me suggest a couple of shareholder approaches in a virtual world:

1. Social Networking: Facebook and LinkedIn shareholder pages discussing the issues
2. Investor Blog: An in-depth discussion of the issues surrounding the annual meeting
3. Online Commenting: Make noise as a commenter on other blogs, investor forums and other online publications
4. Microblogging: Twitter like hell. Got a quick, thought, Tweet it. Find an article of note, put it up.

None of these tasks are easy and they take time and thought. But herein lies the challenge to investors: Do you simply want to rain on the CEO’s parade or do you want to improve the company’s performance and shareholder value? I argue that the virtual meeting is a wake up call for investors to develop substantive strategies for effecting corporate change.

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While I understand certain shareholders’ interests in confronting Symantec executives on a range of issues from lackluster performance and excessive executive pay, isn’t this event really about “sticking it to the man”, face-to-face?

Annual meetings have become tactical events for activist shareholders, a media event where sullen CEOs have to suck it up for an hour of so and occasionally take the heat from angry investors. The press shows up and if the event is in, say New York, the shareholders get a bit of ink.

Great.

So did anything improve? Did the stock skyrocket? Did executives cut back on their grotesque pay packages?

In most cases, the shareholder meeting has no effect on the bottom line. Activists and their followers felt better after the bit of theater and the executives had a stiff one before getting back into their limos to the home office.

No, it’s time to put the annual meeting down. The day has past where the shareholder meeting and the events that transpired meant anything. Executives have always controlled the annual meeting forum and with virtual meetings, that will continue. It will certainly be easier for companies to cut off shareholders communicating online but so what? At best, shareholders got a chance to communicate with perhaps a few hundred other people at a live annual meeting. At a virtual meeting or certainly the run up to an online affair, the audience is virtually limitless.

So an executive cut you off at the virtual meeting? Then Twitter this MF!!!

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Almost daily reports from the Democratic Republic of the Congo describe the human carnage in the central African nation. Death, rape and mayhem seem the norm in the country that can’t protect its people, even with the largest U.N. peacekeeping force in the world.  People in the western world wonder why such horrors continue unabated and demand answers and solutions to this desecration against humanity.

The root causes are many and no single blog post or book on the subject, for that matter, can completely explain the whys of this tragedy. Nor, for that matter, can easy solutions be articulated, much less implemented. But it is worth noting who profits from the horrors in the region.

There are, of course, the ethnic and tribal conflicts pitting governments and rebels against each other. Hostilities stemming from the regional conflict between warring tribal factions of Hutus and Tutsis as exemplified by the neighboring Rwandan genocide is part of the story. Payback will remain on the collective agenda for generations to come. But for anybody paying any attention to what is happening in the Congo, one thing is clear: the mineral wealth in the region motivates everybody to act in the most venal manner imaginable.

Recent news reports tell the story of a recent episode involving a Canadian mining company, Quantum Minerals, Ltd. According to the company’s web site, “First Quantum also holds a 65% interest in the Kolwezi copper-cobalt tailings in the DRC and strategic investments in Mopani Copper Mines (16.9%), operator of the Nkana underground copper mine and cobalt refinery . . .”

In recent months, the company became embroiled in a dispute with the DRC government over problems with its agreement to extract copper at its Kolwezi facility. “[The] Democratic Republic of Congo shut First Quantum’s US$750-million KMT copper project at Kolwezi last September, after a review flagged contract irregularities and production delays at the site.” According to Stockhouse.com .

Stockhouse.com, citing an article first appearing in Reuters, noted that the apparent victor in this dispute was the Kazakh mining group ENRC. Interestingly, an Israeli diamond mogul, Dan Gertler acquired a stake in ENRC. In addition, the Congo mines minister handed the Kolwezi licence to Highwinds Properties, controlled by Israeli investor Dan Gertler.

As reported by Canada’s Financial Post, the London-listed ENRC purchased 50.5% of Camrose Resources Ltd., which is controlled by Mr. Gertler,  for US$50-million and US$125-million of promissory notes. “Camrose controls five copper and cobalt exploitation licences, including for Kolwezi, but does not own the infrastructure at the project left by First Quantum” the Financial Post noted.

Interestingly, Mr. Gertler is close to the DRC President, Joseph Kabila, having been invited to his wedding. SourceWatch.com tells an interesting tale about Mr. Gertler, who apparently has extensive ties not only with the Congolese president but with political leaders in the state of Israel.

The irony in this sordid fight for the country’s resources is that the millions siphoned off from the exploitation of this country’s natural resources is in the midst of the worst human rights tragedy in the last 20 years.

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This was one of the major findings in a report released by the international human rights organization in its 91-page report “‘Where is the Justice?’: Interethnic Violence in Southern Kyrgyzstan and its Aftermath,”

“It’s clear that the massive ethnic violence posed colossal challenges for Kyrgyz security forces,” said Ole Solvang, emergencies researcher at Human Rights Watch and one of the authors of the report. “Yet we found that some of the security forces became part of the problem rather than the solution.”

The report documents large-scale “sweep” operations in Uzbek neighborhoods, during which law enforcement officers beat and insulted residents and looted their homes.  During one operation, in the village of Nariman, security forces injured 39 residents, two of whom subsequently died.

The report also documents abusive search and seizure operations that security forces have conducted daily in Osh’s predominantly Uzbek neighborhoods. Dozens of witnesses provided consistent accounts of how security forces searched homes without identifying themselves, presenting a warrant, or explaining the reasons; detained  people without warrants; refused to tell the families where detainees were being taken; and, in some cases, beat detainees and planted evidence, such as spent cartridges.

On July 22, the member states of the Organization for Security and Co-operation in Europe (OSCE) agreed to deploy a small advisory police group to southern Kyrgyzstan to assist the Kyrgyz authorities in reducing ethnic tensions. Human Rights Watch called on the OSCE to ensure that the force arrives quickly and works effectively. Human Rights Watch also called on all interested governments and the United Nations to support an international inquiry into the violence and its aftermath.

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A recent Wall Street Journal article discusses the increased use of tracking devices used on major corporate web sites to identify detailed information about users visiting those sites. Ostensibly, information collected is used for marketing purposes but the risk to individual privacy poses serious long-term concerns to the online public and equally serious risks for businesses.

The range of the external cyber-risks facing public companies is increasing daily: theft of customer data, malware, online espionage, are just a few of the more common risks. As companies and states respond, pernicious technologies are emerging that pose equally problematic challenges for companies that step over the line.

In addition to defensive business activities online, market research tools like those described in the WSJ article are becoming a growth industry. Details of our private lives that most of us wouldn’t consider discussing over dinner with friends are routinely extracted from us when surfing the Net. Yet the public remains largely unaware of these intrusions.

As the Internet becomes the primary conduit for business, the associated risks increase.  To what degree do companies identify these potential risks? From a governance perspective, what should boards of directors do to ensure that these risks are considered as part of a larger business strategy?

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Israeli authorities have demolished the homes of about 300 Bedouins in a village in the southern Negev desert.
The entire village of al-Arakib was bulldozed on Tuesday, with many of the former residents’ cattle, trees and belongings lost.

al Jazeera, July 27, 2010

Cambodians upset by genocide sentence

The Khmer Rouge tribunal delivered its first verdict on Monday and sentenced a top leader of the genocidal regime, comrade Duch, to 30 years behind bars, but many victims outside the emotional courtroom were left complaining over this sentence.

Asia Times, July 28, 2010

Group says suing UK over Congo conflict minerals

Lobby group Global Witness said on Monday it was taking the British government to court for failing to refer companies trading in Congo ‘conflict minerals’ to the U.N. sanctions committee.

Reuters Africa, July 27, 2010

Iraq: Extremist Groups Targeting Journalists

The suicide car bombing that destroyed the Baghdad bureau of Al Arabiya News Channel and killed at least six people on July 26, 2010, was an assault on the fundamental principles of freedom of expression and respect for life, Human Rights Watch said today.

Human Rights Watch, July 26, 2010

Egypt Punishes Gaza More

Almost two months since Egypt announced it would reopen its Rafah border terminal with the Gaza Strip, operation of the crossing remains sorely limited.

IPS News, July 26, 2010

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The Concept Release, a dense document of more than 150 pages, addresses a wide range of issues including over and under voting, conflicts of interest by proxy advisers and ways in which retail investors can be induced to vote.While this is not the stuff of financial reform a la the Dodd-Frank bill currently slogging through Congress, the outcome of this regulatory exercise may be profound.

Here is a link to the Concept Release document.

As I pour over this document, I will share with you my observations about this Concept Release. Stay tuned.

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What I am most interested in here are two things.

First, what impact will each of these provisions have on improving corporate governance practices? Second, a related question is whether these provisions will have the desired effects their supporters hold dear?

Since the Senate and House bills must still be reconciled, there is some possibility that some of these provisions will be weakened. Corporate lobbyists will likely continue to push on watering down proxy access, perhaps the most troubling provision in the governance reform package. But that said, let me make a couple of predictions.

First, proxy access, while an important tool for investors, will have a limited impact on public companies. I suspect that large cap companies have little to worry about here given that getting holders of say 10% of the companies outstanding shares will have considerable trouble coming together to support their own candidates for board seats. Smaller cap companies may face more pressure from this provision as concerned shareholders have a potent tool for effecting change on boards. The wild card here is activist investors bent on taking over companies for their own purposes, perhaps to the exclusion of other shareholders. Having watched similar processes play out between shareholders and companies, the process matters as much as the outcome. Thus, winning an election may matter less than getting an opposing slate of directors on the proxy ballot. My guess is that proxy access will create a new cottage industry of activist investors utilizing this toll as an effective weapon in their takeover toolboxes.

Second, majority voting in uncontested director elections will likely be the most beneficial provision of the three reforms. I suspect that this provision may make electing directors more of a sport, akin to electing the local dog catcher or sewer commissioner. I suspect that in some limited instances, we will see that directors will actually have faces and statements of qualifications and will begin to actually talk to shareholders. While I think that shareholders will not become quite as agitated as a gaggle of Tea Party activists, even if a director is running against, well, nobody.

Finally, Say-on-Pay will likely result in little if any change in executive pay practices. Early indicators suggest that shareholders either don’t care about executive pay practices or they don’t really understand the concepts underlying pay setting processes as evidenced by votes on executive pay at TARP financed companies. Either way, the old adage, “you can lead a horse to water but you can’t make him drink” seems apt here. However, in the longer term, I suspect that there is a chance that investors will figure out how to sort out the noise from the substance in executive pay practices and vote numbers will start to reflect the underlying tensions between shareholders and executives. I suspect that the most likely scenario here is that pay levels will start to level out somewhat in the next few years regardless of vote outcomes.

I’ll check back in a year on this one.

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This Franco-Belgian bank is a leader in municipal finance in Europe, with the majority of the market in Belgium and almost half in France. Subsidiary Dexia Crediop is a prominent local government finance company in Italy. Dexia Group also offers retail banking through nearly 1,100 branches in Belgium and Luxembourg and provides asset management, insurance and fund administration services.

As noted by the Israeli NGO, Who Profits? ” the bank announced in June 2009 that financing Israeli settlements is contrary to the bank’s code of ethics, and that it would stop providing new loans to West Bank settlements.”

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A Massey Energy spokesman who announced that its three directors standing for election had won by a landslide reminds me of that retort when I read the announcement. Directors Gabrys, Moore and Phillips won their respective reelections by votes of 55.36%, 55.09% and 57.83& respectively.

A landslide? Surely Massey officials jest.

Rarely do directors lose their seats outright. The director election system in the U.S. is rigged in favor of incumbents: Shareholder arm-twisting (proxy solicitation) is the norm, large institutional investors in companies are incentivized to support management and a substantial majority of individual investors simply don’t vote. Yet despite all of this, these three directors received a substantial vote of no confidence.

When Ken Lewis, Bank of America’s CEO received a no confidence vote when shareholders voted for separating the positions of chairman and CEO, he read the tea leaves and resigned a few months later.

Will a similar fate befall these three directors?

My best guess is that they will remain since, all things considering, these and the other directors at Massey Energy seem to be accountable to no one except the company’s CEO, Brian Blankenship. Though there has been considerable hand wringing about the takeover of several financial institutions of late, intervention in a company that kills its employees, is subject to numerous civil and criminal investigations, operates a core business strategy that poisons the air and water supplies and engages in political influence peddling that undermines basic tenets of our American political process, seems like a no brainer.

I wait with baited breath . . .

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