Moxy Vote Blog

On page C1 of tomorrow’s Wall Street Journal, there is an article about a newly identified problem on Wall Street – high frequency trading. According to the article, latency arbitrage is a type of high frequency trading that benefits very sophisticated hedge funds and institutional investors. Of course, that means it also hurts people like you and me. (Unless, of course, “you” happen to be a high frequency trader…..or a broker collecting the extra commissions it generates.)

The bad news for Moxy Vote is that it means the Commission will have to deal with this apparently pressing problem. So, fixing the proxy voting process may not get moved to the front of their agenda any time too soon.

But the good news is that TFS Capital, an investor in Moxy Vote, led the charge in identifying certain problems with high frequency trading. TFS has been a long-time outspoken critic of these problems and its efforts in this area are specifically mentioned in the WSJ article.

One of our advocates, Trillium Asset Management, saw their proposal at Chevron get a remarkable 27% of the vote. The proposal asks for board members with environmental expertise to be considered for any upcoming vacancies on the board of directors. The strong showing was summarized by Trillium’s VP Shelley Alpern who said “The high level of investors support for this resolution is indicative of rising frustration with Chevron’s environmental performance, domestically and internationally.”

The annual meeting was also interesting because many shareholders were denied access to it for unapparent reasons. Four were even arrested for protesting their denial. In response, Ms. Alpern told the Chevron board “I attend several shareholder meetings every year and I have never seen a company deny entry to legal proxy holders. This is outrageous and reflects very poorly on our company’s respect for the laws that govern our proxy process in the United States.” (See full article.)

Moxy Vote wants to recognize Trillium Asset Management, Shelley Alpern and all those shareholders who stayed vigilant.

After years of unsuccessfully trying to persuade Fidelity Investments to consider human rights in their investment decisions, the Unitarian Universalist Association (“UUA”) decided enough was enough. Earlier this month, they chose to move their $178 million retirement plan from Fidelity to TIAA-CREF.

When evaluating this decision, UUA President Rev. Peter Morales said “We are morally bound to consider the impact of our financial decisions. We couldn’t continue to watch passively as money we earned through religious service was directed to companies profiting from a genocidal regime. As clients of Fidelity, we tried to create change from within, but after four years, it became clear that Fidelity’s position on investing in the Sudan hadn’t changed one iota.”  (Read the full press release here.)

If that is not putting your money where your mouth is, I don’t know what is!

The UUA works closely with Investors Against Genocide to persuade Fidelity and other money managers to divest in companies, such as PetroChina and Sinopec, that do business or have ties to the Sudanese government. The UUA and Investors Against Genocide are both advocates on Moxy Vote.

The busy 2010 proxy season is almost over. And it has proven that times are changing. When we started Moxy Vote last November we wanted to give shareholders a platform to vote and be heard. We believe we were right on time.

As an example of this, we were interested to see that shareholders at KeyCorp, Motorola and Occidental Petroleum voted down resolutions put forth by their respective companies on executive compensation earlier this month. Last year, despite complaints about CEO pay, no U.S. company lost votes regarding executive compensation.

Larry Eiben from TFS Capital was quoted on the topic in the Chicago Tribune when he said:

“There’s a renaissance taking place, People have just hit the wall. The negative press that has come out of the latest market downturn and just the general excesses you’ve see in corporate America … the shareholders understand the need now to get more involved.”

Moxy Vote’s goal is to encourage shareholder involvement through easy online voting and lots of advocate opinions. We just want investors to get involved no matter their opinion.

This year investors made their voices heard on “say on pay” but who knows what the future of proxy voting can bring. We can’t wait to find out!

Last Tuesday morning, WellPoint had their annual meeting. About an hour or so into it, activist shareholders finally had an opportunity to have their say. They lined up to grill the board on contentious issues, including questionable decisions made by the healthcare company. Longtime Wellpoint activist shareholder, Dr. Robert Stone (and Moxy Vote advocate who collected almost 10% of the vote on his shareholder resolution), was speaking about conducting a feasibility report to consider non-profit status for the insurer. During his presentation, a WellPoint board member moaned out and rolled onto the floor. Dr. Stone, a physician from Bloomington, rushed to the side of the board member, who happened to be former president George W. Bush’s uncle “Bucky.” He was immediately taken to the hospital for further evaluation.

Luckily, Uncle Bucky has since recovered. However, because of his illness the meeting abruptly ended, which left shareholders with unanswered questions and unheard proposals. Needless to say, this didn’t sit well with the dissidents. With Chairwoman and CEO Angela Braly still at the meeting, some wondered why it couldn’t resume after Bush seemed fine and was taken to the hospital. The dissidents also noted that just before the meeting began, the company decided to cancel its web cast. Only reporters who attended in person could observe.

And while a “say on pay” resolution passed, shareholders never had their say on the more contentious issues. As a result, some shareholders began to protest outside chanting, “Hey, hey, ho, Angela Braly must go.”

Even Michael Crichton may have had a hard time dreaming up this plot.

Over the weekend, I entered The Attention Contest on the Dilbert blog, shamelessly laying out a (what you may see as a cynical) reason to vote your proxy ballots.  Scott Adams, the guy behind Dilbert, let anyone enter the contest with a 500-word plea for attention.

This morning, he selected a winner, and it wasn’t me. I was happy to see that I fared well in the public voting, with one of the top-rated submissions, but my congratulations go to Lukeout, who wrote an engaging bit on the value of candor.

Quick aside: Scott Adams, thank you for Dilbert. (And I’ve worked in marketing!)

If you, gentle reader, are interested in reading more, here’s my submission:

Your vote doesn’t matter. Your ego does.

Unless you’re a Senator, a baseball owner, or Supreme Court justice, your vote doesn’t matter. If you think it does, stop fooling yourself. Had I chosen to never ever vote on anything, you know what would be different in the world? Nothing.

Politicians know this, even as they look you in the eye and tell you that your vote is important. Companies know this, even as they spend millions of dollars encouraging their shareholders to vote to re-elect Peter J. Huffenpiffle III to his thirteenth term on their Board of Directors. Even economists know this, as the Freakonomics authors wrote an editorial in the New York Times, suggesting that voting is an irrational act. After all, you have to do some research, travel and stand in line. And for what? Nothing.

But, the Freakonomics guys say there is a social phenomenon that makes us vote: people do it for the attention. We get social rewards when a neighbor sees us at the polls. We’re not voting because the vote matters – we’re voting because we want other people to think that we care.

We’re narcissistic. We will perform altruistic acts as long as we get attention for being good. Generous philanthropists almost always expect recognition. They get their name listed in a brochure, etched into a plaque, or chiseled into a building. Like the rest of us, they just want some attention.

Similarly, millions of gallons of blood are donated each year. Why? People get stickers to wear proclaiming their selflessness. (Incidentally, I donated blood at the American Red Cross yesterday. I really did. My stuff is the rare A- type, shared by only 6.3% of the population. So I feel extra special about this selfless, selfless act. You people owe me. You know who you are.)

The opposite is also true: people will not do good and important things if they don’t receive the warm and fuzzies from others.

This is evident in the mundane world of proxy voting. Shareholders of public companies receive proxy ballots in elections, and these elections can determine how the company earns money and treats the outside world, including people. If you are like most shareholders, you throw the ballots in the trash. $3.5 trillion of influence, piddled away.

The outcome of a corporate election can directly affect the world. Want to force BP to invest in wind and solar technology? Want to encourage PetroChina to stop genocide? Want to make Chesapeake Energy rethink their CEO’s $75 million bonus given as the stock plummeted? Shareholders can do this.

But, although many feel strongly about these things, they don’t vote. Like political voters, shareholders know their vote, by itself, won’t affect the outcome. And to make matters worse, you vote for or against Mr. Huffenpiffle III in the privacy of your own home. There, no one can observe your actions and give you the attention you seek for doing something noble.

~~~~~~~~~~
Doug Gates helped start Moxy Vote, a proxy voting website. He’s not trying to fool you into voting because your shares matter. He wants you vote with others and enjoy the warm, fuzzy rush from telling people that you support something important. And who knows? We might stop genocide. www.moxyvote.com

If you’re reading these words on our blog, you’re obviously a friend of Moxy Vote, and I could use your help.

I’ve written a 500-word comment on Scott Adam’s Dilbert blog. He’s running an Attention Contest, and I want to win for Moxy Vote. Scott will select a winner from the most popular comments, and I want you to help me make the cut.

Look for my comment titled “Your vote doesn’t matter. Your ego does.” and click the blue thumbs-up icon next to it.

Last week I was in Boston, the historical capital of Massachusetts.   By the time I arrived, the “water crisis” of 2010 had just been resolved.  No, they are not running out of water in Boston yet.  Rather a massive water main broke and the city lost potable water for 4 days.  That meant bottled water was required for drinking, brushing teeth, etc.  Maybe it was just a window into the future telling us we need to get a better handle on addressing the longer term issue of water scarcity.  But I digress…

I traveled to Boston to attend the Ceres Conference that is attended by leaders in shareholder advocacy and public companies that are trailblazers in corporate social responsibility.   Given time constraints and space limitations, I can’t go into details on all the wonderful things I learned at the conference.  But, I can summarize the event by saying that public companies that aren’t integrating sustainable business practices into their core business plans don’t stand a chance in the new global landscape.

However, I want to congratulate the two winners of the Joan Bavaria Awards which were given at the conference.  Bavaria was an early pioneer in socially responsible investing and founded Trillium Asset Management and Ceres.  She passed away in 2008.  These awards, which were given to Tim Smith of Walden Asset Management and the Center for Political Accountability, continue her legacy.  Both winning organizations are advocates on Moxy Vote.

Mr. Smith received the Bavaria Award for Impact.   Walden Asset Management is a leading Socially Responsible Investment (SRI) firm located in Boston.  For over 40 years Tim has been a passionate leader in the SRI field.  He is a past executive director of the Interfaith Center on Corporate Responsibility, and he also served five years as chair of the Social Investment Forum.  He has engaged many large multinational corporations throughout the years and forced them to change for the better.  In his current role at Walden Asset Management, he leads their team of SRI professionals.

The Center for Political Accountability (CPA) was the winner of the Bavaria Innovation Award. CPA President Bruce Freed was on hand to accept the award. When describing CPA, Cheryl Smith of Trillium Asset Management Corporation said “Investors have long observed with great frustration the disproportionate influence of corporations in the political process.  CPA has been groundbreaking in advancing how corporate political contributions are brought into the light.”  As we have blogged about in the past, the recent Supreme Court decision on the Citizens United case increases the importance on the work of CPA as they force disclosure of corporate political spending.

Congratulations again to Tim Smith and the Center for Political Accountability.  Moxy Vote is honored to have such prestigious advocates on our site.

And, by the way, nominations for the 2011 Bavaria Awards are now being accepted via the Ceres website.

Your proxy ballot is missing, but now you want to vote on Moxy Vote?  Easy as pie!  Just call up your broker and politely ask for your control number.  Your broker should be able to provide it over the phone.

You can then use that control number on our site to vote.

On a recent trip to San Francisco, I had the opportunity to sit down with author and Salon.com founder, David Zweig, to discuss his new book Money for Nothing. Money for Nothing, co-authored by Zweig and John Gillespie, a former investment banker, blows the whistle on corporate boards. We broke bread at a funky joint called Rudy’s Can’t Fail Café in Emeryville and yes I was the only one in the place with a tie on!

Money for Nothing looks at US corporate boards and shareholder rights. They point to directors asleep at the wheel as one of the major causes of the financial crisis. The authors go on to describe these boards as predominantly 60 year old white men who make decisions based on the fact that it’s not their money. Sadly the trickle-down effect onto ordinary people is enormous. Stories of mismanagement and scandalous behavior, add some melodrama fit for the big screen. Their recommendations could forever change boardroom culture, improve accountability, reduce conflicts of interest, and improve shareholder involvement. Money for Nothing is definitely a thought provoking and entertaining piece of literature.

I thought it would be fun to do some cross promotion with our users. The first 25 Moxy Vote users to vote on any ballot that has at least one advocate opinion will receive a free copy of Money for Nothing. You don’t have to vote along with the advocate, just vote on the ballot. After you vote, send me an email at mark@moxyvote.com with the name of the company you voted on and I will send you a copy of the book. Then hit the hammock or the coffee shop and enjoy!