Tuesday, July 20, 2004

How Nader Disillusioned Me

Over the weekend, I listened to a repeat of the Dean-Nader debate on NPR. I was already convinced that Nader's presidential candidacy risks throwing the election to Bush. But one of Nader's comments particularly irked me.

Nader was questioned about one of his contributors, noted Republican fundraiser and former EMC CEO Richard Egan. Asked why a Republican would support him, Nader snarled: "Perhaps he believes in civil liberties."

Richard Egan is, without doubt, a committed Republican. According to a July 1 story in the Boston Globe, Egan built his political reputation as a major donor and fundraiser for the Bush campaign. The Bush administration later appointed Egan as ambassador to Ireland.

Moreover, the company that Egan built, EMC, has demonstrated a pattern of contempt for shareholder rights and shareholder democracy. The paragraphs below in italics are quotes excerpted from an column I wrote for Investing For a Better World, the newsletter of Trillium Asset Management.

Ralph, I have to tell you that Richard Egan is no progressive. Moreover, his old firm, EMC, exemplifies the corporate arrogance and lack of accountability that you have always fought tooth and nail. That is until you needed money for your 2004 Presidential campaign.

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Speaking Truth to Power
EMC Seeks to Cocoon CEO From Criticism
September 2001
By Simon Billenness
 
...Prior to [its 2001 AGM], EMC had received its first shareholder resolution but the company, whose business is data storage, lost it. "It fell through the cracks," the hand-wringing EMC spokesman Mark Frederick told Reuters. One hopes this is not indicative of how EMC’s database storage products actually keep data safe.

This was not the only way EMC slighted its own shareholders. In an extraordinary breach of AGM etiquette, EMC did not provide shareholders with open microphones. Tim Smith of Walden Asset Management was forced to approach the stage and shout questions to EMC’s top management.

Not long after this fiasco of an AGM, Boston Globe business columnist Steve Bailey tied EMC to legislation that would have allowed companies to replace their annual face-to-face shareholder meeting with just an on-line version. Conveniently, this would allow companies like EMC to completely cocoon their CEO from awkward direct questions by shareholders. Bailey reported that the chief sponsor of this bill, state senator David Magnani, was also the state law-maker most amply blessed in campaign contributions from former EMC chairman Richard Egan. Bailey quoted Magnani stating: "I am their senator."

EMC’s paid legislative friends nearly succeeded in slipping this appalling bill through the Massachusetts legislature. Fortunately, corporate watchdogs United for a Fair Economy and the Neighborhood Assistance Corporation of America noticed the bill and staged a last-minute press conference at the State House to block it. Anne Parry and Cheryl Smith of Trillium Asset Management joined Stefanie Haug of Walden Asset Management and Amy Domini of Domini Social Investments in speaking out against the bill. Stung by the criticism, the legislature dropped from the bill the provision allowing companies to eliminate their face-to-face AGM’s.

EMC has mysteriously lost resolutions, blocked comments at its AGM, and funded politicians who propose legislation that would take away the traditional right of shareholders to directly question top management at shareholder meetings. Can this company be trusted to run a fair AGM in the absence of laws protecting shareholder rights?


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