June 2002 Message
 Robert A G Monks

Friends, 

This has been the most productive season for corporate governance in the US since I became interested more than twenty years I ago. I want to share with you some of the highlights: 

  1. The “global warming” shareholder resolution achieved higher than 20% of the votes at ExxonMobil. This marks an important step in the process of owners informing management of the standards by which we want our company to be run.

  2. The Hewlett Packard proxy contest was won by the “wrong” party, because neither party raised nor did the court consider the pivotal questions of conflict of interest of key institutional shareholders under ERISA that would have produced a contrary result. I tried unsuccessfully before the meeting to involve the Pension and Welfare Benefit Agency of the Department of Labor and counsel for Walter Hewlett. The current Pensions & Investments (June 10th edition) contains my article explaining the situation. For reasons of copyright, I cannot provide a link, but am attaching a “mock court” decision from which I adapted the article for P&I. I must warn you that the “opinion” is pure fantasy and reflects no “legal” relevance, aside from my own fading skills.  Chao vs. HP

  3. The ECONOMIST has devoted much well considered space to corporate governance in recent editions. The June 8th-14th US version at p.63-65 – The Value of Trust – provides a classic statement of the essential core for effective corporate governance: “Ultimately, however, governance is unlikely to improve much until the institutions that own large chucks of corporate America start acting as real owners, by keeping a sharper eye on their boards and their management.” This critical doctrine is the theme underlying discussions for implementing the Myners Report in the UK. Following Enron, there can be no delusion that the present system works. We can now turn to something that will.

  4. FORTUNE magazine has devoted its Cover Story in the current edition (June 24) to corporate governance issues. Happily, you can read these stories by clicking on the attached link. Fortune.com:  Investors of the World, Unite!

It is very rare that the wind blows behind reform. We must not waste the current favorable conditions. 

Bob Monks