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CLOSING REMARKS TO USA FOUNDERS COMMITTEE
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[Handwritten addition: Thank you Glen— ]
Welcome to Amarillo and to the 1989 USA Founders Committee Forum.
Ralph [Handwritten addition: [Text stricken: explain who Ralph is ]] has prepared a thorough
review of where we stand on USA's goals and objectives.
All of you can participate in the discussion... offer your views, ask questions.
[Handwritten addition: Working session as usual ]
What I'd like to do is give you an overview of where USA has been and
where I see us heading.
Before we started USA in August 1986, you didn't hear much about the role
of shareholders in America's corporations... before then, management
controlled the debate.
That's changed, and USA has been a big participant.
The tremendous pressure on corporations to restructure for efficiency and
competitiveness is all based on one thing; maximizing shareholder value.
Six years ago when I mentioned that phrase— maximizing shareholder
value—people thought I was coo coo... Today it's the most commonly used
phrase in Corporate America.
Our message is finally getting out... Serving shareholder interests means
higher productivity and more competitive American corporations.
I'm surprised, though, that it's been so difficult to get some of these points
across.
lt's just common sense... Get the job done for shareholders by realizing the
full value of the company's assets.
In other words, a company's stock price is a good reflection of management's
performance... If management does its job, the stock price will be close to
asset value.
Of course, the management [Text stricken: crowd ] has spent a lot of time and
shareholders' money to distort this argument because it requires
accountability to the owners, the shareholders.
[Handwritten addition: They are spending big bucks - yours - but they are losing.]
But we've exposed the management position for what it is... self-serving,
protectionist.
In 1987, the Business Roundtable decided to use Senator Proxmire to push
antishareholder legislation through Congress.
The BRT funded a front group called the Coalition to Stop the Raid on
America.
The group's goal was to discredit USA and generate support for Proxmire's
bill.
They knew Roger Smith couldn't get the job done, so they invented this
"coalition" and hired Moon Landrieu, former mayor of New Orleans, as the
spokesman.
Moon's job was to hold press conferences and testify at hearings across the
country.
We found out early on what the group was all about... The BRT asked each
of its members to shell out $50,000.
We alerted the press to their scam, but Moon always dodged the question of
where his money was coming from... That's the thing you want to do with
the press or Congress.
The BRT finally sent Moon packing and dissolved the coalition last summer.
That was shortly after our supporters derailed Proxmire's anti-shareholder
bill and turned it against the BRT.
Those Senate votes against poison pills and golden parachutes were a
tremendous victory for us in 1988... Proxmire proclaimed that Boone
Pickens had done a hostile takeover of the U.S. Senate:
— Don't I wish... Takeover, that is
That wasn't it at all... the other Senators got the message from our
members and realized we were on the populist side of the issue.
Another big victory last year was the SEC's final adoption of the one-share,
one-vote rule... The rule would never have been written without USA.
We didn't get everything we wanted, but the SEC rule preserves the
principle that shareholders should have voting power commensurate with
their ownership stake.
But lo and behold, the BRT hasn't learned its lesson... It's suing the SEC to
have the rule thrown out.
The BRT's move spurred an unprecedented response from USA members...
it's an issue of basic fairness and democracy.
USA will participate as a "friend of the court" in the case... We will
vigorously defend our victory.
Those battles last year at the SEC and in the Senate enhanced our
credibility... The BRT and the management lobby certainly know that USA is
a force to reckon with.
A recent newsletter for the corporate clients of a large New York bank said,
quote: "Inspired by USA, a substantial segment of the public has come to
view corporate managers generally as either inept or self-serving. Pickens
and his cohorts are effectively driving a wedge between management and
shareholders by creating the image of entrenched management opposing
shareholder rights issues."
We didn't create the image; we just pointed out the facts.
This year, we will continue making our case in Congress... Institute a
confidential vote, eliminate poison pills, ban greenmail and golden
parachutes, guarantee one-share, one-vote and equal access to the proxy
process.
But we've got to get the focus in Congress back on shareholder rights... all
the LBO publicity has distracted them.
But some good may come out of the LBO squabble if we can highlight the
double taxation of dividends as a shareholder rights issue.
There are some encouraging indications that Congress may make some
progress in relieving the tax burden on dividends.
As far as LBOs are concerned, I think they're generally good for the
shareholders and for the restructured companies.
What you have to watch out for, though, are the conflicts of interest that
arise when managers try to buy out their own shareholders.
Look at the RJR deal... It's easy to see what Ross Johnson was trying to do
to his own shareholders; there was an $8 billion difference between his
initial offer and the final bid... Fortunately, he didn't get away with it.
Our position is that LBOs are fine as long as the bid is opened up to the
competitive auction process... The courts are moving in that direction.
Obviously, we're all pleased by USA's accomplishments for 1988; including
its membership growth, from 15,000 to more than 58,000.
The challenge now is to retain these members by giving them the kind of
performance and results they expect and deserve.
USA has not and will not be compromised (Explain):
— Figurehead
— Big Money
— My "No Hostile Takeover" announcement
A big focus this year will be on strengthening existing relationships and
improving our grassroots network.
We want to provide more information to our members to make their
advocacy even more effective.
In our first two and a half years, we've established the legitimacy of the
shareholder rights movement.
We've accomplished an awful lot, especially when you consider that experts
say most successful organizations take three to five years to get off the
ground.
But as effective as we've been, we're only beginning.
Our objectives are perfectly aligned with the broader, national goals of
maintaining a prosperous and vibrant economy.
We've already demonstrated that the agenda of the corporate elite— protectionism, conglomeration and entrenchment is an economic
dead end.
This group, the Founders, is extremely important to USA's health and
vitality.
There are more than 200 of you here today... an impressive statement of
your support and commitment to USA.
I'm often amazed at the time and energy that some of you devote to this as
volunteers.
Without you, USA wouldn't be the organization it is today:
-- America wouldn't be the same, either
Bea and I are glad you're all here... It's a terrific way to start another great
year, meeting with our core supporters to share ideas on USA's direction.
I know we'll gain a lot from this meeting today... And don't forget that our
annual meeting in Washington is coming up in late June; I hope to see you
all there.
But right now it's time to get on with the day's program.
Here to lead you through the nuts and bolts of USA is our director, Ralph
Whitworth.
First, for those of you who aren't aware of it, I'd like to point out that Ralph
has been with USA from the start.
[Handwritten addition: Explain Jamie—
good academic—
not a manager— ]
When Bea and I got this crazy idea to put together a non-profit shareholder
organization, Ralph was the one we turned to for the dirty work.
He has only been USA's director for a short time, but believe me, he has
been a major force behind USA from day one.
Please welcome one of USA's original Founders, Ralph Whitworth.