1997 BOISE CASCADE
3. SHAREHOLDER PROPOSAL: REINCORPORATION IN IDAHO
Howard D. Naylor, 333 W. Groveview Lane, Boise, Idaho 83702, who owns 1,000 shares of Boise Cascade common stock, has given the Company notice that he intends to present the following proposal at the annual meeting.
RESOLVED, that shareholders urge the Board of Directors of Boise Cascade take the steps necessary to reincorporate our Company from Delaware to Idaho.
The statement of the shareholder in support of the resolution is as follows:
I believe that our company, founded in Idaho, headquartered in and named for the Idaho state capital, should not be governed by the corporate laws of Delaware.
By incorporating in Delaware instead of Idaho, Boise Cascade can engage in "forum shopping," the same process that would permit a plaintiff to pick his judge.
Forum shopping, I believe, demonstrates a disregard for the integrity of law with both specific and general repercussions for shareholders.
Specifically, Boise Cascade faces many legal challenges. On environmental issues, the company was listed as a "potentially responsible party" at 53 federal or state-listed hazardous waste sites at the end of 1993, and 38 sites at the end of 1995. The company sued its insurance companies over some of these costs in state court in Boise.
After closing its Council, Idaho mill in 1995, the company moved the equipment to Guerrero, Mexico, a region of conflict. In June 1995, a protest by farmers about timber cutting left 17 farmers dead and 20 wounded by the police. The state governor resigned and 28 police officers and four officials were jailed. Such terrain is fraught with peril for Boise Cascade and its shareholders.
Our company also enters court on labor issues, and has been assessed more than $4 million in penalties in recent years.
Such unfortunate problems bear on the issue of an Idaho incorporation directly because corporate law defines director accountability, liability, and venues for penalties. Idaho lawmakers could decide that a Boise Cascade director who is grossly negligent in ensuring that the company adheres to environmental or labor law could be held personally liable. Delaware law excuses directors from being held liable for gross negligence.
Generally, an Idaho incorporation would also serve as a demonstration that our company honors the law, and doesn't view it as an inconvenience for skillful attorneys to circumvent.
The accident of history that permits corporations to charter in any state has created an unhealthy competition among the states to write management-friendly law. Delaware, in leading this competition, reaps some $200 million, or 20% of the state budget -- enough to reduce personal taxes on its citizens. (Conversely, if Idaho companies incorporated in Idaho, this would generate fees that would reduce personal taxes on Idahoans.)
When this type of resolution was introduced at Minnesota Mining and Manufacturing (also incorporated in Delaware), 3M's management contended that Minnesota law isn't necessarily any better. In part, I agree. Any state that dares to strengthen its incorporation laws to serve shareholders, risks losing the few companies still chartered in that state to Delaware.
But until shareholders declare an end to this nonsense, forum shopping will erode corporate accountability.
STATEMENT BY DIRECTORS IN OPPOSITION TO THE PROPOSAL
Your board of directors recommends a vote AGAINST the shareholder proposal to reincorporate in Idaho.
Preface. Before addressing the stated purpose of this resolution -- reincorporation in Idaho -- your board of directors takes strong exception to the inaccurate statements set forth by the proponent. The allegations with respect to the Company's environmental and labor records and its dealings in Mexico are simply untrue. The Company is committed to maintaining the highest ethical and legal standards in all business arenas, regardless of forum. Our repeated invitations to the proponent to discuss his concerns about the Company were not accepted.
Reincorporation in Idaho. Since 1931, the Company has been a Delaware corporation. Unlike any other state, Delaware has developed and maintained a separate court system devoted solely to corporate and business matters. That court system, and the large body of corporate law it has developed, provides companies and shareholders alike with a high degree of predictability in the myriad of legal issues facing businesses today.
Of the top 100 industrial corporations in the United States, more than 60% are incorporated in Delaware. Less than 30% are actually incorporated in the jurisdiction of their principal business location. As the proponent of this proposal indicates, a similar proposal was presented to the shareholders of Minnesota Mining and Manufacturing ("3M") seeking reincorporation from Delaware to Minnesota. The proposal failed, with less than 2.5% of 3M's shareholders electing to reincorporate in Minnesota.
Your board of directors does not believe that reincorporation is in either the shareholders' or the Company's best interests.
The shareholder proposal regarding reincorporation will be approved if the votes for the proposal exceed the votes against the proposal. Abstentions will not be counted as votes for or against the proposal. Reincorporation in Idaho would require a formal amendment to the Company's Certificate of Incorporation.
The Board of Directors Unanimously Recommends a Vote "AGAINST" the Proposal to Reincorporate in Idaho.
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1997 Wise Use Movement.
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