Most shareholders of Symantec (NASDAQ:SYMC) dating back to around 2005 know all too well the danger of unchecked executive power. Now, in addition to the destruction of shareholder value, Symantec may be poised to impede the ability of shareholders to sufficiently, let alone wholly, enjoy and exercise their rights, based the company’s plan to carryout a virtual-only annual meeting of shareholders on Monday, September 20th. Glyn Holton, Executive Director of the nongovernmental organization, United States Proxy Exchange, has warned of the disadvantages shareholders could face given the current lack of safeguards with the meeting delivery system designed by Broadridge. Below is a copy of a letter I have sent to Symantec’s Head of Investor Relations, Chairman, and CEO. I encourage all investors to visit the US Proxy Exchange website to learn about the Symantec virtual meeting matter.
September 17, 2010
Mr. John W. Thompson, Chairman
Mr. Enrique T. Salem, CEO
350 Ellis Street
Mountain View, CA 94043
Dear Messrs. Thompson and Salem:
I am writing to you not as a frustrated shareholder of Symantec – for I do not own shares – but rather, as an individual investor gravely concerned about the precedent that may be set by Symantec’s planned Sept. 20, 2010, virtual-only annual shareowner meeting. Your ostensibly misleading reasoning and irrational obstinacy to host a virtual meeting is very disturbing and defies common sense given both the individual and institutional investor opposition you have faced thus far as a result.
With Symantec’s stock price down approximately 30% since mid-year 2005 (coinciding with its controversial $13.5B acquisition of Veritas), down by more than half from its late-2004 peak, and effectively trading at 2003 levels, one would expect that upsetting shareholders any further would be the last thing Symantec would want to do. One is led to believe that Symantec’s officers and directors are fearful of possible direct in-person questioning by shareholders, and are thus opting to take cover behind computer screens and an annual meeting delivery system that lacks proper safeguards for non-insider shareholders. Note that Intel Corporation also attempted to implement a virtual-only meeting and instead rightfully decided to continue to provide a hybrid format meeting (in-person and Internet accessibility).
On page 2 of Symantec’s 2010 Proxy Statement it states that one of the two reasons for holding only a virtual meeting this year is “current cost savings objectives.” The nominal savings from a virtual meeting must be a mere drop in the bucket compared to the costs that shareholders bear (especially non-insiders) in terms of the company’s expanding issuance of equity; the use of capital to repurchase stock and thus, “… reduce the potential dilutive effect of the issuance ….” (Per Proposal No. 3, 2010 Proxy); the nearly $4B spent on stock buybacks between March 2006 and March 2008, all at higher stock prices than where Symantec is trading at present; the $1.5B-plus spent on M&A in 2010 and $18B-plus spent since 2005; the more than halving of the value of goodwill on the balance sheet; the aforementioned all in the face of a depressed stock price and no stock dividends paid whatsoever; the more than doubling of Mr. Salem’s pay in fiscal 2010; and an unwieldy Board of Directors comprised of 18 members, half of whom are insiders.
In closing and with all due respect to Symantec’s efforts to improve its business and share price, the issue at hand involves having a virtual-only annual shareowner meeting and is of utmost importance. Until it has been demonstrated that proper safeguards exist to ensure sufficient shareholder representation, it is critical that shareholders continue to
be offered regular shareowner meetings. Accordingly, I support the United States Proxy Exchange’s efforts to establish “best practices” for virtual annual meetings, and hope that Symantec will lend its support as well. The peril of a further concentration of executive power and limited outside/independent board influence has profound negative implications for the future of the U.S. equity markets. Cost savings seem insignificant compared to the potential abuses that may arise from a premature introduction of a virtual annual meeting delivery platform. While Symantec’s officers and directors may be of the highest moral principles, there are no assurances of the reliability of the delivery platform itself and neither can we know in advance how many unscrupulously operated corporations will seek to exploit this system.
CC: Scott Taylor, Symantec Corporate Secretary
Helyn Corcos, Symantec Head of Investor Relations
Glyn Holton, United States Proxy Exchange
Disclosure: At the time or publishing, the author does not have any position in shares of Symantec.