Item 5-Stockholder Proposal Relating to a Shareholder's Advisory
This stockholder proposal was submitted by Robert M.
Dowling, 503 Mountain Laurel Road, Fairfield, CT 06430,
beneficial owner of 50 shares, and is quoted directly from his
"RESOLVED, that the company shall be requested to establish
a Shareholder's Advisory Committee. The Committee will provide
non-binding recommendations to the Board of Directors pertaining
to Shareholders' interests on policy matters relevant to the
company and its business, such as major acquisitions,
restructurings, executive compensation, ethical issues, mergers
and other significant matters on which the Board is to consult
with the Committee. The Board shall insure the effective
operation of this Committee and will give consideration to its
recommendations. This resolution shall in no way limit or
otherwise restrict the ability of the Board to take any action
it deems in the company's best interest.
Members of the Committee shall serve without compensation,
except for the reimbursement of reasonable expenses. The
Committee will have a minimum of fifteen (15) members and the
Board shall develop procedures for the selection of members
willing to serve, provided that the following apply:
1. Members will be the beneficial owner of at least
500 shares of the company's voting stock for the entire period of
2. At least seven (7) members shall be selected from the
1,000 largest beneficial owners of the company's voting shares.
3. Members will have no present affiliation with the
company, other than as a Shareholder.
4. The term of each member shall be for two (2) years and
in no instance can a member serve more than two (2) consecutive
The final voting results for this proposal, initially
presented at the 1996 Shareholder meeting resulted in
7,566,738 shares in favor or 3.66 percent of those voted.
This positive response exceeds the criterion established by the
SEC for resubmissions and as such it is again presented for
further consideration at the 1997 meeting.
Although it may be argued that procedures are in place to
communicate with Shareholders, many view management's periodic
overviews as insufficient. The proposed committees personnel
composition has the potential to make a significant contribution
and will be neither costly to maintain nor bureaucratic. As an
advisory group, the Committee by definition cannot impede the
decision-making process and it's quality will be such that
confidentiality will be maintained. The Committee would also
assist in assuring that ethical standards are enforced and
applied to all employees, regardless of position, in a uniform
and fair manner.
The formation of the Committee will act as a valuable
resource and will benefit the company by strengthening confidence
between Shareholders and Board representatives.
The Board of Directors recommends a vote AGAINST this
proposal for the following reasons:
A shareholder advisory committee is unnecessary since the
responsibilities of the Board and its Committees include the
functions described in the proposal. They review and approve
the company's financial and competitive positions; review
operations and activities that pose risk to the company; and
review the company's adherence to its vision and values and
compliance with our Corporate Conduct Guidelines.
The Board's legal and fiduciary obligations include
gathering all the information it deems necessary, from whatever
sources, in order to make decisions that are in the best interest
of the company and its stockholders. Although this proposal
states it will not limit or restrict the Board's ability to act
in the stockholders' best interest, it provides that on stated
issues the Board "is to consult with the committee" and "give
consideration to its recommendations." Thus, before taking action
on such issues the Board must call together this committee, wait
while the committee gathers its consultants or advisors, and delay
acting until it has had the opportunity to consider in good faith
the committee's recommendations.
The requirement that the Board consult with the committee on
an open-ended list of matters, along with the logistical
complexity of consulting with a 15-member body, would certainly
slow the Board's ability to act, thus impeding its ability to
manage the business and affairs of the company for the benefit of
all stockholders in those situations where time is of the essence.
For example, the delay inherent in noticing and convening the
committee, and in waiting for its advice, may be fatal to a proposed
transaction, such as an acquisition or new business opportunity.
Furthermore, the other party to the transaction may, for legitimate
business reasons, object to confidential information involving the
transaction being spread beyond directors and officers of the
Nor would the addition of this committee be without cost.
The proposal requires the company to pay the committee members'
expenses, including presumably any fees for expert advice from
lawyers, investment bankers, compensation consultants and others,
even if the board has already retained experts to provide such
The Board believes that the creation of such a committee
would provide no benefit to the company or to its stockholders
and would add a time consuming, costly and redundant layer of
Therefore, the Board of Directors recommends a vote AGAINST
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WISE USE MOVEMENT,
David E. Ortman,
P.O. Box 17804
Seattle, WA 98107
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