Submit a Shareholder Proposal to Make Your Voice Heard

If you own shares in a public company and would like management to act on an issue of importance to you, why not take action yourself by submitting a shareholder proposal to be voted on at the company's annual meeting.

If you do, you probably won't be alone. Shareholder activism has increased in recent years, as indicated by the number and variety of shareholder proposals now appearing on proxy cards. According to RiskMetrics Group, as of February 1, 2010, some of the most popular shareholder proposals expected to appear on proxy cards this year are related to : shareholder advisory role on executive compensation, independent chairman of the board, shareholder rights to call special meetings, action on climate change, and review or report on corporate political spending.

To submit a shareholder proposal, you must meet certain eligibility requirements, including:

1. Owning at least $2,000 worth of the company's securities or 1% of the shares that can be voted at the annual meeting.

2. Having owned the stock for at least 12 months before submitting a shareholder proposal.

3. Owning the shares through the date of the annual meeting.

4. Proving to the company that you own the shares and submitting a written statement to the company that you plan to own them at least through the annual meeting. If you are a registered shareholder, the company can verify your share ownership from its records. If your stock is held by a third party, such as a bank or brokerage firm, you will need to ask that institution to submit a letter to the company verifying your ownership position and that you have owned the stock for more than a year. You can also prove ownership if you have filed a statement with the Securities and Exchange Commission concerning your holdings.

Your shareholder proposal must be submitted by the deadline set forth in the company's' proxy statement (which usually is about six months before the date of the annual meeting), and it must provide a description of your proposal, including supporting data, in no more than 500 words. Also, if your proposal is accepted, you or your representative must attend the annual meeting.

If your proposal doesn't gain a majority of votes at the annual meeting, you can try again. To resubmit it in future years, your proposal must win at least 3% of votes in the first year that is it on the ballot, 6% in the second year, and 10% in each subsequent year.

Even if your shareholder proposal received the majority of votes, the company is not required to take action on it, but don't let that discourage you. A large and/or growing vote for your proposal over a period of years can attract attention from other activist shareholders and put pressure on management to respond in some way.

Sources:

www.law.uc.edu, Rule 14a-8 - Proposals of Security Holders

www.riskmetrics.com, 2010 Proxy Season Watchlist of Key Shareholder Proposals/RiskMetrics Group

Stephanie Barton, www.investopedia.com, How Your Vote Can Change Corporate Policy