Saturday, May 05, 2007

An Open Letter to SEC Chairman Christopher Cox on the Importance of Proxy Access

Via Email

May 5, 2007

The Honorable Christopher Cox
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C.

Dear Chairman Cox:

I have been following, with great interest, the discussion and debate inside and beyond the Commission on the subject of whether shareholders should be granted more access to company proxies to, for example, run for election to the board of directors.

I know that you and the other Commissioners will be discussing this issue intensely over the coming months.

I wanted to provide you with my story of how I've tried as a 34-year old individual investor (holding only 45 shares) in Yahoo!, for the last 5 months, to band together support of like-minded individuals (and institutions) via the Internet, my blog, a wiki, online polling, and YouTube videos, who wish to effect change at the company.

As of today, I have the support of approximately 75 other individuals who collectively own 2 million Yahoo! shares, worth $64 million (or about 0.2% of the total shares outstanding).

As you will see below from a recent article I published in Seeking Alpha, I nominated myself to the Yahoo! board last February. Despite many people telling me to give up on the idea of running for the board, as it would cost about $200,000 to run my own proxy contest, I had an individual who was part of my group willing to pay this cost. Recently, I was instructed that I couldn't run for the board leading up to Yahoo!'s annual meeting in June, because, although I was a shareholder on the date I nominated myself (well in advance of their requirements, according to their current corporate by-laws), I wasn't a "shareholder of record." Apparently, because my online broker had not at the time of my self-nomination yet informed the company's transfer agent that Eric Jackson owned 45 shares, I couldn't run for their board.

Life is full of technicalities. Of course, I'm disappointed. However, we need to focus on the bigger picture and I believe this story demonstrates the importance of the work you and the other Commissioners are doing in seeking to find a way to allow forthright and well-meaning shareholders to have a more meaningful voice to all shareholders through the company proxy.

The "Plan B" for Yahoo! that my group submitted to the company for consideration (which was essentially the platform I was running on for election to Yahoo!'s board) was not devised purely by me. It was edited greatly through the use of a wiki and online polling. Only after it was improved, by the democratic input of other shareholders, did we see the tremendous support from others. If our ideas didn't have credibility, no one would have supported us and "pledged" their shares.

The critics of open proxy access say that special interest groups will high-jack the agendas of corporate management. We say: let the best ideas circulate and rise to the top. There will be no support for ideas that have no merit. Knowing that shareholders can raise their voice when necessary will be a great motivator for management to do a better job before the fact, rather than afterwards.

I hope you find this "case study" of interest.

Please let me know if I can be of any further assistance to the Commission as you deliberate on this very important topic. I also hope that I'll be able to follow your rules in the 2008 proxy season.


Eric Jackson, Ph.D.
President & CEO
Jackson Leadership Systems, Inc.

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