August 19, 2008
Board Directors Mark Hamilton and Jesse Knight
Alaska Air Group, Inc.
PO Box 68947
Seattle, WA 98168
Via: FAX (206) 392-5807 and email keith.loveless@alaskaair.com
Dear Mssrs. Hamilton and Knight:
I appreciate General Hamilton's invitation to meet on September 10, 2008 with Richard Foley and myself. We are currently in discussions with AAG management to make it economical and practical time wise to attend the meeting in SEA.
If we are unable to attend, I wanted to provide this letter to you which we ask you share with the full board. It lays out some of our thinking on how our companies might be turned in new directions to help stem rising fixed costs while at the same time growing income.
Our current corporate/worker union institutions are obsolete and unsustainable. Fundamental changes are unavoidable. For starters, our current stockholders aren't really true investors. If we properly restructured, they could bring in new month-to-month capital to help fund our business. Their option or right to demand the sale of our companies to garner a small return needs to be challenged with new thinking. Failure to embrace proactive thinking combined with the current business reality puts a thumb on the scale favoring hostile takeover.
Workers and customers are active wealth creators, but hold little or no voting or governing power. If the company is sold, we lose jobs and consumption options to access and utilize a reliable, corporate air transportation system. This arrangement is imbalanced and undermines loyalty and trust from people putting real time and effort into making our companies successful. These people deserve a commensurate reward and a better deal.
PARTNERSHIPS
Partnering is a key word that describes emerging new-millennium corporations and limited liability companies. This is most evident in raising capital, which can take the form of capital partners, versus stockholders. Once past the IPO stage, stockholders in a joint stock corporation are unproductive, especially when compared to the power they command in the company.
Indeed, building new relationships with capital partners opens new doors for corporation and asset finance, as well as providing new sources of income for stakeholders. It can also begin to properly balance governing power between workers, customers, active investors and management.
A partner is an integral part of the business. Partners are involved in both creation of wealth, diffusion of risk and the sharing in the returns of investment. Conversely, as non-partners, stockholders, unions and other unaffiliated third parties share a common fault: If recognized, they hold power that can't be justified. Relationships that don't properly connect and don't organically self-balance need restructuring.
Although there is much economic upheaval right now, these times offer many new opportunities to fix what's wrong with C Corps and mainline labor unions. There are new corporate financial models covering asset purchase, labor, customer involvement and corporate governance. These promising structures involve creating and expanding partnerships that can be uniquely tailored to individuals and various productive economic relationships within the corporate body.
REVENUE SHARING MODELS VERSUS ONLY PROFIT
We should consider a constellation of ways of tying together interests and income of workers, customers and investors besides a strictly profit-based model. We could look at sharing agreed-upon percentages of revenue, as well as partaking in "money's worth" arrangements. We might not always produce a profit. We will always generate revenues, or are capable of offerings that could produce new income. Some call it "not-for-loss." Supposedly, it is the stockholder group that always demands higher profits to support a higher return on their investment, but like we have just discussed above, that assertion doesn't make any sense.
If you think about it, profit is quite an inefficient way of producing money to fund future capital requirements of our companies. The profit incentive has a negative connotation, which can entail abuse of stakeholders: driving down workers' incomes, over-charging for seats and other services we sell to our customers (considering the quality or amenities), pulling out of markets or offering little or no return to investors.
Conversely, growing shared-revenue exudes positive energy. It equates to building up worker incomes to promote retention of experience, offering quality products at prices that truly covers our costs while making customers consider new roles to protect their consumption access, and paying a return to our investors in proactive ways they help determine.
Compensation for managing partners can exist more equitably from a standpoint of revenue sharing, because they share from the same, big pie that all the other stakeholders can relate to. The perception now is management shares in the profit pie with much larger slices than other stakeholders.
EXCHANGING FIXED COSTS FOR VARIABLE COSTS BASED ON SHARING OF REVENUE
The main under-pinning is hooking corporation/asset financing to the strategic stakeholders of workers and customers. Over time, their patronage helps fund the capital requirements of the company, plus it provides a second income that should help hold the line on worker fixed hourly wages or salaries.
For example, in order to finance our upcoming deliveries of new airliners, a portion of AS/QX worker pension money could be used. The return on investment would be a negotiated percentage of net revenue, which is a completely dynamic and productive compared to a bank fixed-interest rate on a lease that has to be paid regardless of how our companies perform in the marketplace. Where current restrictions exist, new structures need to be established.
After they qualify, our customers could be invited into this relationship by agreeing to a higher ticket price in exchange for a negotiated percent of revenue going toward their new dual role as a capital partner. This could be done through the mileage plan.
To do this with confidence, we probably need to separate the title of our assets from the equity, or create contracts to ensure that those assets whose equity is being shared aren't sold except for normal repair and replacement.
Public trading models exist where stakeholders who contractually hold or own certain percentages of our revenue could sell the "revunits" over periods of time to other people for whatever the market would bear. This could be an additional method of creating liquidity for stakeholders holding positions of wealth in our companies. One has to look no further than the abuse of stock options at many companies, such as back dating, the promotion of an unstable stock price in order to set low strike prices, etc. to be convinced we must seek out better methods than what trading secondary securities on stock exchanges has to offer.
COMPENSATING IN MONEY'S WORTH
Another way to address rising fixed costs in relation to labor and vendor/contractor input is to pay in ways other than cash. One way is pay in what we produce: airline seats.
We could sell at "cost" or wholesale a certain number of positive-space seats per year to stakeholders (use them or lose them) as partial or piggy-back compensation for labor, customer patronage or investment. Stakeholders could then consume these seats themselves, or sell these tickets on any market and pocket the difference. This is a "money's worth" value that could hold down fixed costs. It makes every stakeholder a salesmen of what we ultimately are all responsible for –– selling what we do. For those who have no interest in selling, our reservation agents could sell tickets on their behalf, with an appropriate commission going to the company creating another source of revenue.
We could also bring into the what's-it-worth-to-you equation of developing alternative financing for paying off student loans and/or buying personal residences through the capital rent method for company workers. This could be another way to get "income" or "money's worth" to people without raising fixed hourly rates.
SOME OF MINE AND RICHARD FOLEY'S BACKGROUND
I studied some business in college, but my real economic education has occurred over the last 30 years working for Air Oregon and Horizon Air that were merged into the AAG. Over time, I watched as our combined companies struggled, and then began to form opinions and take various actions to help empower our stakeholders to work more cohesively.
In 1998, I started the non-profit HACECA –– the Horizon/Alaska Customer/Employee Co-Ownership Association (then Horizon CEO George Bagley supported this effort, and wrote a $1,000 Horizon check to HACECA in 1999 to help pay for initial operating expenses).
In 2002, Richard Foley and I started the Ownership Union® in response to serious problems that companies experience with mainline labor unions. I subsequently resigned as a QXTeamster, and have chosen to be a member and President of OU®. The OU® was a founder supporting organization of the Global Justice Movement, which has allied organizations in North America and Europe (see http://www.globaljusticemovement.org/ and http://www.globaljusticemovement.net/.)
In forming OU®, we consulted with the Center for Economic and Social Justice in Washington D.C. CESJ is the world's leading advocate for binary economics (two incomes: one from wages/one from capital), and capital homesteading, which would empower all citizens to become owners in productive capital at all companies whose managment agreed to participate.
From 2005-2007, I moderated the OWNERSHIP discussion group hosted by the Capital Ownership Group virtual Internet think tank at Kent State University. This enabled me to rub elbows with some of the world's leading economic thinkers.
In 2005, myself and others including Richard Foley started Downwind Corp, and in 2007 ACTIPATE LLC (dba Downwind Flying Club). Essentially, we wanted working "labs" to demonstrate ways that AAG or any traditional C Corp might operate more productively by bringing stakeholders into more personal relationships with assets via their financing and equity ownership.
DWC/ACTIPATE have bought two training aircraft, a Cessna 150 and C172, and are currently acquiring our first multi-engine aircraft. We made these asset purchases using capital partners who agree to a return based on a percent of what our companies are earning. We didn't utilize banks or loans tied to paying an arbitrary, compounded interest rate. This low-cost and productive capital has allowed us to start-up and grow in a difficult business environment.
We have demonstrated a much more affordable way for people to learn how to fly and maintain their flying proficiency via broad ownership of equity in our assets by all participants. We have the highest-paid flight instructors in the nation, by the simple fact that worker partners have access to the assets which are the magic carpets to earn good incomes off their certificated skills. We are currently developing a finance program for tuition based on the renting of capital, with the potential for students to become investors in their own education.
I along with Richard Foley have run six consecutive Internet opposing proxy solicitations at the AAG. We have lobbied many of our institutional owners to consider voting for our candidates based on the changes we propose in this letter. Additionally, we helped spur on the recently-adopted U.S. SEC rules regarding electronic delivery of proxy materials.
Richard Foley is a long-time stockholder reform advocate, and has been involved in several attempts to convince boards and management at several big corporations to look at new ways of structuring themselves. They all deal with various forms of how stakeholders can begin to own their individual part of production/consumption helix, which paves the way for people to first-hand experience how they can help themselves and their families by actively partnering with their company.
BABY STEPS THAT COULD BE TAKEN NOW
A FINAL CONSIDERATION
If airline management and boards do not respond to the social and environmental aspects of allowing participation by company stakeholders in our business, we think that there are a number of negative possibilities that should be considered, such as the U.S. government nationalizing the U.S. airline industry. The Air Transportation Association broached that possibility in a report in 2003. In May of this year, the New Zealand government renationalized its rail and ferry systems after private industry failed to capitalize and run them properly. If this happens in the U.S., it could include an entire restructuring of the national transportation system of air, rail, trucking and auto.
In our business dealings, we have to learn that money is not an independent, stand alone "thing". It exists only in a proper and honest relationship between humans. The supposed universal good in "making money" is sentimentally one-dimensional. What we really want to spend our time developing is loving, supportive social and economic relationships between humans that properly nurtures our relationship with Nature. From that point, money considerations will automatically and appropriately flow.
Thank you for this opportunity to communicate with the AAG board about our concerns and suggestions for possible changes in the future.
Warm Regards,
Steve Nieman
August 3, 2008
Mr. Marc Langland
Lead Independent Director
Alaska Air Group, Inc. Board
PO Box 68947
Seattle, WA 98168
Via: FAX (206) 392-5807 and email keith.loveless@alaskaair.com
Dear Mr. Langland:
I am writing on behalf of William Davidge and myself. Bill was the worker-stockholder sponsor of Proposal No. 5 Say on Executive Pay. As you know, the company published an SEC 8-K last June 23, 2008 disclosing to the stockholder group that this proposal won a Yes-No vote of 55% of the stockholders entitled to vote at the meeting on this item. This resolution was written as advisory only.
Nevertheless, we believe in the spirit of this proposal, and would like to see the board honor the wishes of the majority to implement an appropriate procedure to allow the stockholders to issue an annual thumbs up or thumbs down on the job of how our board's Compensation Committee pays upper management.
Like many workers, we perform various roles including ones as customers and as ALK stockholders. We observe daily first hand how are companies are running. What we see concerns us. We support openness and transparency, and feel doing business in any other way is ultimately counterproductive and hurtful towards the many people in various capacities earning incomes from our companies.
In this new millennium, there are many new emerging ways for corporate stakeholders to partner together. We wish to explore some.
We look forward to your reply.
Sincerely,
Steve Nieman
email cc: Mr. Richard Foley
Mr. William Davidge
AAG Director Mark Hamilton
Mr. Keith Loveless
Ms. Karen Gruen
July 20, 2008
Mr. Marc Langland
Lead Independent Director
Alaska Air Group, Inc. Board
PO Box 68947
Seattle, WA 98168
Via: FAX (206) 392-5807 and email keith.loveless@alaskaair.com
Dear Mr. Langland:
I am writing on behalf of Terry K. Dayton, who was the worker-stockholder sponsor of Proposal No. 4 Cumulative Voting. As you know, the company published an SEC 8-K last June 23, 2008 disclosing to the stockholder group that this proposal won a Yes-No vote of 51.43% of the stockholders entitled to vote at the meeting on this item.
This resolution meets AAG Bylaws Article II Meeting of Stockholders Section 5 Quorum, Article X Amendments, as well as Article 8. Bylaws in our company's Certificate of Incorporation (see attached Appendix A).
Mr. Dayton is wondering when the AAG board will install this vote and amend our Bylaws and/or our Certificate of Incorporation accordingly.
As you know, there is a dedicated core of AAG worker/customer/investor stockholders who are deeply concerned about the direction our companies appear to be headed in this tough airline industry and the economies of the North American continent where we conduct business. We are doing what we can to ensure a prosperous future for the diverse group of stakeholders that make up our companies.
Sincerely,
Steve Nieman
email cc: Mr. Richard Foley
Mr. Terry K. Dayton
AAG Director Mark Hamilton
Mr. Keith Loveless
Ms. Karen Gruen
APPENDIX A
AAG BYLAWS
ARTICLE II MEETING OF STOCKHOLDERS
Section 5. Quorum.
At any meeting of the stockholders, the holders of record of a majority of the total number of shares of outstanding stock of the corporation entitled to vote, present in person or represented by proxy, shall constitute a quorum for all purposes. If a quorum is present at any meeting of stockholders, the affirmative vote of the holders of a majority of the stock present in person or represented by proxy and entitled to vote on the subject matter shall be the act of the stockholders, except as otherwise expressly provided in the Certificate of Incorporation, these Bylaws or applicable law.
ARTICLE X
AMENDMENTS
These Bylaws may be altered or repealed and new Bylaws may be made by the affirmative vote of a majority of the Board of Directors, subject to the right of the stockholders to amend or repeal Bylaws, including Bylaws made or amended by the Board of Directors or to adopt new Bylaws, by the affirmative vote of a majority of the outstanding stock of the corporation entitled to vote thereon, provided that notice of the proposed action be included in the notice of such meeting.
AAG CERTIFICATE OF INCORPORATION
ARTICLE 8. BYLAWS
The Board of Directors shall have the power to adopt, amend or repeal the Bylaws for this corporation, at a duly called meeting or by written consent in accordance with Article 9, subject to the power of the stockholders to adopt, amend or repeal such Bylaws, and, to the extent, if any, provided by resolution of the Board of Directors providing for the issue of a series of preferred stock, by the affirmative vote of the holders of not less than a majority of the outstanding shares of each such series entitled to vote thereon.
(6-23-08 email from Steve Nieman to AAG management and 08
CHALLENGERS)
Hello All,
AAG management is to be congratulated on disclosing in today's US SEC 8K the results from the annual May stockholders meeting (until waiting later to disclose in the more traditional 10K in late July or August). I also liked the prominence of the results being published at the top of the filing.
To me, this shows a higher regard by AAG management for the important institution of democratic stockholder voting than has been shown in prior years. If results aren't published as soon as possible, it puts a dark cloud over the whole commitment of the board and company officers to honor and uphold our bylaws and certificate of incorporation regarding the democratic election of corporate directors.
As we all know, big changes are afoot regarding how directors will be nominated and elected in the future. I believe, soon, electronic solicitations like the ones the AAG CHALLENGERS have conducted over the last six years will become much more prominent. I believe all AAG stakeholders will benefit from these changes –– if they are administered properly.
Management has the power to ensure all benefit from these changes of how directors might be elected –– or not. It is in the interest of all AAG constituents to embrace and participate in these changes, so that the board will be truly representational of all the diverse groups that make up our companies.
We must never cease in finding mutually beneficial ways to work TOGETHER. This will be our saving grace in successfully conducting business in this tough-as-nails economy and airline industry.
Again, congratulations, and I trust AAG management in the future will build on this positive development.
Regards,
Steve Nieman
President, the Ownership Union®
(member of the loyal opposition)
Dear _______________________,
The following is a shareholder proposal that has been submitted to Alaska Air Group Inc. (ALK) for the 2008 proxy season. I think that this is the most important and significant proposal of 2008. It along with two others was filed today on EDGAR (see): http://www.sec.gov/Archives/edgar/data/766421/000121715008000001/0001217150-08-000001.txt
Under existing SEC and exchange regulations a company is granted the waiver to not identify a proponent of a shareholder proposal in its proxy statement, voting instructions, or proxy card. A company's materials usually instruct those desiring to know the identity or anything about the proponent or election challengers to contact the company’s gatekeeper. I believe that this is an unwise as well as an unlawful SEC infringement of the First Amendment. This infringement permits purposeful "chilling" of inquiry about this “public information”. The only purpose, I can see, for restricting access to this information is to delay its distribution and/or intimidate those vulnerable to, or fearful of company reprisal.
This infringement may have seemed an insignificant detail before the advent of the Internet and Federal government mandate of “opt out only” in company investment and retirement plans. The SEC has recognized the major shift in ownership mechanisms from retail to commercial intermediaries substantially provided by employer provided alternatives. Now coupled with universal electronic distribution of proxy materials and the technological ability to track employee investment choices and votes, this detail can no longer be ignored.
I firmly believe, that the reality of this detail is now of equal importance with all other disclosure information, and that it must include accurate electronic contact data on who is challenging the status quo in a proxy contest.
In a perfect world, there would be a binding requirement for access to be included in a company's proxy statement and proxy materials. According to some interpretations, the courts have already indicated recognition of this. However, such access is not technically necessary. Accurate identification and full contact data would overwhelmingly eliminate many of the barriers and drastically level the playing field.
Were corporations required to include the information identified in the following shareholder proposal 98% of what proxy "access" seeks would be achieved and the shareholders in this country would simply be “a mouse click away from information freedom”.
Shareholders should be free to see all the information to which they are entitled. Clearly, this includes proposal and election challenge information and materials. No longer should stock owners small and large be forced onto the labyrinthian “shareholder information underground railroad” of dark forests of cross regulations, shifting sands of interpretations, convoluted paths lined with quasi-legal booby traps, and dead end detours camouflaged by hired double agents of mendiloquence.
There probably will continue to be problems and confusion in the casting and counting of the votes. However, with the requirement to provide a few simple lines of public information many voting conflicts should efficiently resolve themselves. These sunshine standards will enhance the identification of the dissipated cost of the disease of opacity and further reveal the genuine value of transparency.
This proposal could and should be better written. Nevertheless, due to its overwhelming importance to all the shareholders of this country, I think that modest guidance from the SEC can cure any mis-expression.
It has been clearly evidenced and demonstrated that conducting and winning an “Internet only proxy contest” is within the abilities of dedicated shareholders at minimal dollar cost (see the five year record of such at www.votepal.com). Our experience shows us that proxy tabulation should be removed from all corporations and be conducted by an outside irrefutably independent agency/institution. This should result in a clear cost reduction over the existing system. If such an agency/institution does not occur by foresight, then it may occur by law.
Now that the demonstrated, proficient, fair, and cost effective technological alternatives exist, no company or government can afford to remain parties to a system, which is otherwise. The failure to act to implement this system should raise the possibility of actionable fiduciary failure.
IMO, opponents of transparency should suffer punishment by the citizenry shareholders in both the fiscal and political markets. Advocates and champions of opacity should be encouraged to relocate to locales were confidence in the honesty and integrity of all systems is less valued. If such fail to remove themselves, then I must agree with Pius X ’s Msgr. Umberto Benigine, “For such people there is only one remedy: the Inquisition.”
I believe that the super majority of our current national economic difficulties are the direct consequences of a systemic tolerance of opacity; criminal acts are responsible for only a tiny percentage of the problems in the financial arena, opacity is the number one cause.
Shareholder access to critical decision-making information should always be "Only a Click Away!"
Respectfully,
/s/
Richard D. Foley
TEL: 520-742-5168
FAX: 520-742-6963
6040 N CMO Arturo
Tucson, AZ 85718
rerailer@earthlink.net
www.votepal.com
NO. 7 –– RESPECTING SHAREHOLDERS' RIGHT TO KNOW
RESOLVED, that our board in 2008 amend our bylaws and any other appropriate governing documents to require that the company shall, other than on specifics restricted by law, regulation or which jeopardizes commercial advantage, strictly honor the shareholders right to proper disclosure of identification and contact information to the fullest extent possible by technology.
In all communication or reports to its shareholders, the company shall provide complete identification information on all individuals or parties reported therein. It shall contain their proper name and complete address information, including their telephone, email and website information with functioning hyperlinks.
Where more than one set of contact data exists, all shall be included. Where the communication is a proxy statement or any notice of an annual, special or other shareholder meeting or any references to any such meeting, it shall include in the same prominence as appears in the balance of the notice, all contact information of any shareholder proponent, challenging candidate(s) for election, and/or any opposing proxy solicitation.
Proponent Steve Nieman, a Horizon Air Captain, has notified the Alaska Air Group, Inc. that he intends to present the following proposal at the 2008 Annual Meeting. You can contact him via his website www.votepal.com/, via email at reachus@votepal.com or phone toll free 1-866-2-VOTEUS. He looks forward to discussing this proposal with you.
Supporting Statement
The Internet has revolutionized communications for everyone including shareholders and the companies they own. The power of the Internet to inform and educate has given birth to a vast array of new tools for tracking and analyzing investments. Average investors now have available computer tools that not long ago could be afforded only by powerful financial institutions. Yet all investors, large and small, are faced with the reality that no gate keepers of truth and accuracy exist on the Internet.
Only the company is in a position to assure that its shareholders are provided with accurate name and contact information. Some current regulations permit a company to withhold contact information. But to enhance communications with its shareholders, we believe this information should be provided. The prime concern of this bylaw proposal is to ensure that company shareholders are provided with correct identification data in any form of communication the company chooses, whether it be paper and/or electronic. No valid purpose can be served by not disclosing it.
We believe that our company has a duty to provide full, complete and accurate identification information about individuals, parties, agencies, entities or companies it communicates to us about. Shareholders have a right to contact a person or party concerning an event, and they should not be forced to make a separate request to company officials. Making separate inquiries or requests wastes company time and resources.
I ask for your support and a Yes vote on Proposal No. 7
From: Steve Nieman <stevenieman@mac.com>
Date: April 1, 2007 10:10:57 AM PDT
To: "Karen A. Gruen" <karen.gruen@alaskaair.com>, Keith Loveless <keith.loveless@alaskaair.com>,
Bill Ayer <Jan.Kelly@AlaskaAir.com>, Jeff Pinneo <Jeff.Pinneo@HorizonAir.com>,
Brad Tilden <brad.tilden@alaskaair.com>
Subject: Re: AAG's opposition stance to Nieman's 07 proposal
Dear Karen and Keith,
Richard and I are in receipt of your March 23, 2007 letter regarding the AAG Board's opposition to my Governance Authority proposal. I, too, an waiting, and will be interested to see how the staff of the Enforcement Division of the U.S. SEC will grant or not grant the company's sought after no action letter to this most important question of how to open up the proxy process to non-board nominated director candidates.
Governance in a democratic society, whether it be in national or state government, or corporations –– is founded on the principle of lawful empowerment of rights and duties of individuals to get involved. Indeed, lacking the involvement of concerned and intelligent people, the democratic principles of self-government whither and decay to the detriment of all who cherish liberty.
If any elected body, whether it be in Congress, the White House, State Legislatures or corporate board room feels they can act without reference to the people who cast the votes to put them in power –– well, I guess they've lost touch with the most fundamental of natural human rights. Thomas Jefferson probably wrote it best in the preamble to the Declaration of Independence that "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain inalienable Rights..." Since we're all equal, we have an equal right to get involved in Life and governing.
No man or woman is an island. They are only as good as the human network holding them up.
As I hope we've always made clear in the past, Richard, the proposalists and I are more than willing to meet with the AAG board or AAG management at any time to further an agenda of working in harmony. Only by holding hands together can AAG stakeholders be strengthened as a group to work toward our companies' success in this difficult, difficult business environment we are forced to operate in.
Governance of corporations is changing right in front of our eyes. For many, change is never easy. We can keep living under a false illusion that the past can provide all answers to a dynamically-changing future –– or we can seize this moment and attempt to shape these solar winds of change for the benefit of all who create wealth here: workers and customers.
I continue to look to AAG, AS and QX management to grab this bull by the horns. It cries out for your full attention with open minds. If we are successful, we will be in much better shape to balance any negative force that heads our way.
Regards,
Steve Nieman
March 23, 2007 letter (click pdf here to read) of AAG's opposition statment to Steve Nieman's Governance Authority proposal to eventually be published in the 2007 AAG Definitive Proxy Statement. It's a 1.8 MB file (sorry); it might take awhile to load...
The below is an excerpt from the Capital Ownership Group (COG), a massive
virtual think tank on broadening ownership run by Kent State University. An
expanded version of this excerpt can be found at:
http://listserv.kent.edu/cgi-bin/wa.exe?A2=ind0610d&L=ownership&T=0&X=79D9321D985445BCF3&Y=stevenieman%40mac.com&P=8113
The author of this posting is John Médaille, whose contact info can be found at the end.
Anyone can access COG, register and join in the discussions. I am a volunteer moderator of the OWNERSHIP section.
Corporate stakeholders are only as good as they are informed and enlightened by continuing education. Corporations and how they have metamorphosed over time must be continually analyzed to ensure that they operate under ethical standards built on a foundation of justice. This can be "personified" in corporate bylaws and certificates of incorporation, the two main documents that form the legal basis for how a corporation is to be governed.
There are a lot of forces in play in Life. But I think it has been undeniably verified (new cases daily) that if you reject the value of justice and the difficult demands it makes on us, trouble will be your constant bunkmate.
Regards,
Steve Nieman
P.S. If you're busy and have no time to read, here's a snippet:
The position of ownership has changed from that of an active to that of a passive agent. The owner now holds a piece of paper representing a set of rights…but has little control. The owner is practically powerless to affect the underlying property through his own efforts…the “owner” of industrial wealth is left with a mere symbol of ownership while the power, the responsibility and the substance which have been an integral part of ownership in the past are being transferred to a separate group in whose hands lies control.[1]
Mr. Bogle is well-qualified to comment on these matters, being himself a successful
investor and the founder and CEO of the Vanguard Funds, one of the leading
groups of mutual funds...
(beginning of excerpt)
Property should be an aid to productive work; ownership should be the means
to insure that those who do productive work will receive the rewards of their
labor. It is not the "owners" (the tribe or clan) who receive the
rewards (except indirectly), but those who use the land. Rewards are for
use, not legal ownership. When rewards go to the legal owners, and when these
owners are "private" individuals, then ownership becomes (as R.
H. Tawney noted) a substitute for work rather than an aid to it. The notion
of rewarding legal ownership rather than actual use is the essence of capitalism.
In the end, it even works against the capitalists. As John Bogle notes in
the "Battle for the Soul of Capitalism," the rewards of work with
Corporate America now go neither to owners nor to workers, but to an intermediate
class, the uber-managers.
Ownership of a business once designated active control of that business, but now, as John Bogle notes:
The position of ownership has changed from that of an active to that of a passive agent. The owner now holds a piece of paper representing a set of rights…but has little control. The owner is practically powerless to affect the underlying property through his own efforts…the “owner” of industrial wealth is left with a mere symbol of ownership while the power, the responsibility and the substance which have been an integral part of ownership in the past are being transferred to a separate group in whose hands lies control.[1]
Mr. Bogle is well-qualified to comment on these matters, being himself a successful investor and the founder and CEO of the Vanguard Funds, one of the leading groups of mutual funds. Mr. Bogle laments, at great length, the way shareholders, the nominal “owners” of a firm, have been short-changed both by the über-managers of the firm, who appropriate the lion’s share of the rewards to themselves, and by the securities industry through high management and intermediation fees. Bogle proposes a complex set of “reforms” to ensure that the stockholder will get a greater share of the rewards, displacing both the managers and the financial intermediaries. However, while many of these proposed reforms are certainly worthwhile, they will not change the nature of the system and will not really affect the outcome very much. For Mr. Bogle has correctly identified the effects, but is mistaken about the causes.
Bogle would like investors to be more “active” in managing the companies they “own.” But in fact, this is simply impossible. A person with a diverse portfolio of investments cannot possibly be an expert in all the various disciplines represented by that portfolio. Further, even if the investor had the expertise, there is very little he could do with it. In any large enterprise, the voice of an individual investor will count for little, even if he had the means to make himself heard, which he usually doesn’t. This is not completely the result of a conspiracy on the part of managers or mutual funds, it is a perfectly natural and necessary process. Whenever ownership is concentrated in large institutions, the owners must grant control and use to another group. Think about a person using his own property for production. In this case, ownership, control, use, and responsibility will all reside in the same person. However, there is, of necessity, a limit to the amount of property he can use. At some point, he cannot put an additional increment of property into production without surrendering some degree of control and use. Therefore, if property accumulates in one entity, then control and use will slip away from the owners and to the managers. There is simply no other way things can work.
Were the über-managers to give a defense of their privileges, they might say to Mr. Bogle and the stock-holders something like this: “You take no interest in the company, you endure no burden for its management, you bear no risk for its debts. Yet, in return for your piece of paper, you want a greater share of rewards. But your piece of paper represents capital which we long ago consumed and for which we have paid, and continue to pay. Yet, you still have your capital intact, and probably a handsome increase in its market value. Therefore, the dividends we pay you, although but a pittance of the profits, are still a more than adequate reward for the work you do not do, the risks you do not bear, and the capital you no longer provide. Like the soldiers in the Gospel of Luke, you ought to be content with your pay and say no more!”
This is indeed a coherent argument. It goes to the question of who should rule the corporation and how the rewards and responsibilities ought to be apportioned. Ownership in corporations is vested, for the most part, in those who provided the original capital or, occasionally, subsequent infusions of capital. This seems “natural” to us, but in fact it is a social custom, one dictated by neither natural law nor economic theory. In economic theory, capital can hire labor through a wage payment and claim all the rewards, or labor can hire capital through an interest payment and claim all the rewards. Or they can both claim the rewards through some sort of sharing of ownership. But in any case, economics per se takes no stance on the issue. But from the standpoint of political economy, or what we might call macroeconomics or social theory, it makes a great deal of difference, and these differing methods of ownership greatly effect the kind of society that results, the allocation of rewards and responsibilities, and ultimately, the stability of the economic and political systems.
In the current system, ownership resides in the original investors, or in those to whom the original investors have sold their interest, usually on the stock market. Buying stocks in a company is called “investing,” but that it a misnomer; it is properly called “speculating.” An investor is one who provides firms with the capital they need to continue in operation, to grow and expand. A speculator provides the firm with no capital at all, but merely makes a bet on what the firm will be worth at some point in the future. The stock-market, for the most part, is analogous to a used-car lot. When one buys a used Ford off the lot, Ford receives no money. Likewise, when one buys a “used” share of Ford on the stock-market, the Ford Motor Company receives no funds. It is true that existing companies can raise funds in the stock market by issuing new shares, but they rarely do so, even when the stock-market would be the most efficient way to raise funds; current owners generally do not like to issue new shares because it dilutes their ownership rights. Capital needs for most companies are met by retained earnings, banks, bonds, or venture capitalists. Therefore, the money “invested” in the stock market does not, for the most part, perform the functions of true investment, but rather competes for funds that could go to expanding the economy.
There is a curious problem with ownership residing solely in the original investors. Production occurs at the intersection of capital and labor, both of which are consumed in the process of production. The original capital represented by a share of stock has been consumed, no less than the original labor that consumed it. We would consider it strange if a worker were to go the Ford Motor Company and say, “Ten years ago, I contributed some work to your company, and you should continue to pay me.” Yet we have no problem when a shareholder says, “50 years ago, a person from whom I bought a share of your stock contributed some capital to your company, and you should continue to pay me for it.” We have no problem with this because it is customary, in our culture, to award ownership to original investors. Yet, it would be difficult to distinguish between the two cases; the worker was paid for his work and the capitalist for his capital. Whether or not one is willing to defend the customary arrangement, it is necessary to acknowledge that it is merely customary, and not something dictated by natural law or economic necessity. Once we have acknowledged this, then we can discuss whether this custom is the best from both the social and economic standpoint.
We take it as an absolute and self-evident principle that wealth should go
to those who produce it. There simply is no other defensible principle of distribution.
If an able-bodied man should receive something for which he did no work or
to which he contributed no capital, then he has stolen it. On the other hand,
if a man does not receive his rightful share of what he has worked to produce,
he has been robbed. Both wealth without work, and work without wealth, are
instances of theft; in the first case a man receives what he does not earn,
and in the second he earns what he does not receive.
If a man or a woman produces something by himself or herself, that thing is
his or hers, wholly and entirely. If he grows some vegetables on his own land,
using his own tools and his own labor, then the entire product is his and no
one else may rightfully claim a share. There are few who would argue with this
principle. However, most production is social; it requires that groups of workers
come together with tools, raw materials, and plans. Further, production presumes
a wider social context of laws, markets, roads, coinage, schools, families,
and so forth. There is now no single “owner” to which the wealth
can be attributed, but a collection of “owners.” The output of
a production process, therefore, is not a private property, but a social product
of many property owners within a social structure. Therefore, the division
of the social product depends on who can claim a property in the social product,
and to what degree. If we accept as the rule that “wealth belongs to
those who create it” when dealing with individual producers, we can then
restate the rule for social products as “Wealth belongs to those who
create it, in the same proportion that they contribute to its creation.”
[1] Bogle, The Battle for the Soul of Capitalism, 31-2.
John C. Médaille
"A dead thing can go with the stream...
but only a living thing can go against it."
-G. K. Chesterton
http://www.medaille.com/distributivism.htm
john@medaille.com
October 24, 2006
Hello All Concerned AAG Stakeholders,
The 2007 proxy season is about to kick off at the AAG.
You are receiving this blind email due to your expressed or implied interest in tracking continuing AAG stockholder activism. Some of you have helped us in the past. THANK YOU! Other new people need to carry the ball for their share of the time…
We are looking for AAG worker and customer sponsors for around twelve shareholder proposals.
We are also looking for at least three candidates to run for AAG board seats that will be up for election in May 2007, more good candidates if we can get them.
We continue in our ongoing attempts to engage the AAG board to get them to work with us.
To review the minimum qualifications for AAG stockholder activism:
1.) You need to have owned enough shares of AAG stock to have maintained a MINIMUM of $2,000 equity from last May, 2006's stockholder meeting on May 16 with intent to hold those shares THROUGH mid-May's 2007 stockholders meeting (somewhere around 75 shares). These shares can be owned through matching stock via our 401(k)s. You must provide proof by a copy of your latest 401(k) statement or Employee Stock Purchase Plan statement from Smith Barney (you can blacken out private info; all that is needed is your name, number of shares, and identifying account number).
2.) You must agree to sign the below proxy to name Richard D. Foley as your proxy, which is revocable by you at any time by written notice to Richard. We do this to coordinate all communication from AAG management through Richard to all the proposal proponents.
3.) Then you must agree to sponsor a proposal of your choosing by the mid-December 2006 deadline.
We have identified the following topics listed below (they are not listed in any particular order). The copy of the proposals will be at all possible the latest writing, which has passed U.S. SEC scrutiny at other corporations. For new topics, we will be writing from scratch. Also, all proposals will be written to be binding on the AAG board.
You want more participation and check-and-balance on power wielded by the board, management and our unions? Get involved as a stockholder. Power corrupts. It must be appropriately balanced or our jobs and pensions will be adversely at risk. It makes good business sense, too.
Another reason? This is a heck of a lot of fun. I look forward to your help this year, because as always, lonesome is pretty lonely~~Steve Nieman
p.s. If you want off this blind email list, just send me an email and you'll be gone…
2007 PROPOSALS
1. Proposal calling for reimbursement for short-slate proxy contests
2. Proposal splitting positions of chairman and CEO
3. Proposal boosting shareholders' ability to call special meetings
4. Proposal counting uninstructed broker votes solely for quorum purposes only
5. Proposal calling for three year tri-annual election of strategic stakeholder directors of workers/customers; non-strategic stakeholder directors including independent directors stand annually for election
6. Proposal establishing Roberts Rules of Order parliamentary procedure prevailing at all stockholders meeting
7. Proposal eliminating management golden parachute compensation from employment contracts
8. Proposal that would not deny right of workers to own company securities with the same rights as registered stockholders; bylaw so company couldn't deny 401(k)ers their full rights
9. Ballot access for director nominees by shareholders
10. Ethics, "claw-back" bylaw where any employee would have to forfeit any ill-gotten gains from manipulation of securities or accounting (i.e. stock option or performance grants)
11. Proposal giving shareholders an advisory vote on compensation committee reports
12. Cumulative voting
13. Shareholder proposal regarding political contributions
14. Stock option-Reform proposal
15. Proposals regarding enforceability of stockholder votes
16. Proposal to redeem or vote poison pill
17. Proposal to encourage shareholders to vote
18. Proposal to adopt shareholder committee to address our majority votes
19. Proposal requiring executives to "own" their pensions like employees
20. Proposal: protecting worker pension rights
~~~~~~~~~~~~~~~~~~
Mr. Bill Ayer, Chairman and CEO
Alaska Air Group, Inc. ("AAG" or "company")
PO Box 68947
Seattle, WA 98168
Dear Mr. Ayer:
This Rule 14a-8 proposal is respectfully submitted for the next annual shareholder meeting. This proposal is submitted in support of the long-term performance of our company. This submitted format, with the shareholder-supplied emphasis, is intended to be used for publication in our company's definitive proxy statement.
Rule 14a-8 requirements are intended to be met –– including the continuous ownership of the required stock value until after the date of the applicable shareholder meeting. I have held my stock worth a minimum of $2,000 market value for more than one year, and plan to own it through the AAG Shareholder's Meeting in May, 2007.
This is the proxy for Mr. Richard D. Foley and/or his designee to act on my behalf in shareholder matters, including this Rule 14a-8 proposal for the forthcoming shareholder meeting before, during and after the forthcoming shareholder meeting.
Please direct all future communication to Mr. Foley at:
6040 N. Camino Arturo, Tucson, AZ 85718
HM: (520) 742-5168
FAX: (520) 742-6963
Email: <rerailer@earthlink.net>
Your consideration and the consideration of the Board of Directors is appreciated.
Sincerely,
____________________________________________
(signature above)
(print your name on line below)
____________________________________________
(print your address please on lines below)
____________________________________________________________
____________________________________________________________
Date: _________________________
From: stevenieman@mac.com
Subject: Keep our AAG common stock 401(k) match
Date: May 31, 2006 5:39:22 PM PDT
To: Jan.Kelly@AlaskaAir.com, Jeff.Pinneo@HorizonAir.com
Cc: keith.loveless@alaskaair.com
Hello All,
I just wanted to call your attention to this important article.
My opinion as an AAG 401(k)-er is for my employer to continue to offer AAG stock as a matching equity. It is cheaper, and it helps build a spirit of ownership. It also empowers workers with stockholder rights to peacefully and productively address changes in our corporate governance to ensure power is balanced between board/management and workers, customers and stockholders. This way we can work together more effectively to ensure long term profitability with all the associated benefits.
I believe our current vesting schedule is fair. I believe requiring AAG workers to hold matching stock for five years before being allow to "sell" or move it to other Vanguard accounts is a valid requirement.
I believe in the future we're going to have to look at paying workers from the earning of capital rather than simply raising hourly rates, which we cannot easily afford in our competitive industry. This will involve the use of AAG common stock, which may have to be held for long periods of time in order to hold down costs.
Fear from what happened at Enron is moving the intelligent use of owning our common stock in wrong directions. In my book, the chief failure at Enron was lack of effective governance of their corporation by stakeholders, the chief group being the workers. We witnessed again the axiom that power corrupts; absolute power corrupts absolutely.
On the near horizon is XBRL technology, a chief training program being organized
by Bryant University. Take a look at the following website. Open access by
stakeholders of our books and records has many advantages in building trust.
http://www.xbrleducation.com/
The way to reduce liability and the potential for lawsuits from workers regarding stock losses (or potential losses) is to bring 401(k) plan participants into administration of our plans. I have urging this for some time. I also believe worker representation on the AAG board will also help to diffuse the chance that these expensive settlements might occur. We need to keep good pensions as a solid benefit of working for AAG companies so that we can retain quality workers.
I request that management seriously look at making these significant governance changes so we can all continue to earn good livings from our companies. These changes need to be made sooner than later.
Regards,
Steve Nieman
p.s. Keith –– please forward this to the AAG board. They need
to stay abreast of these important developments...
------------------------
Vesting
Vesting refers to your right to the amount in your 401(k) account. You are always 100 percent vested in your own personal contributions. The first 4 percent of the employer matching contribution will be 100 percent vested immediately. The balance of the employer match vesting will be based on your years of service with the company. An employee shall receive 20 percent of the company's contribution account for each year of service (any calendar year in which you complete at least 1000 hours of service). After five years of such service you will be fully vested in all your company contributions account.
Your account will automatically become 100 percent vested under the following
circumstances:
• If your employment is terminated due to disability
• You attain 65 while employed by the company
• Upon your death while employed by the company
Participants who are 100 percent vested are able to diversify all or part
of the AAG stock in their 401(k) account into any of the plan’s other
investment options. Horizon recognizes that an employee getting closer to retirement
age might need additional flexibility when investing retirement savings.
___________________________
From: Richard D. Foley:
You are free to share the following portions I have written with your friends, families and fellow workers and investors.
Some may have already seen a copy of the WSJ article below, for that I apologize. According to this article the total dollar value as of 2004 for all 401K's in all companies is $305 billion. I well remember attending the first testimony at the SEC Hearings in 1986/87 that resulted from the efforts of the United Shareholders Association ("USA"). One of the first panels to testify was made up of representatives of 5 major public pension funds. Collectively, they held over $300 billion, and one of the Commissioners mentioned that was equal to the total of the US budget deficit for that year. In the following years due to the efforts of USA and may others, major changes were made that brought meaningful positive changes to the investment and shareholder rights systems. Yet a lot did not get done.
I think that there is deep concern in a number of places about 401K stock getting organized and exercising its ownership rights. I think that is exactly what should happen. That is not to say that workers should not have a balance in their personal savings and investments, but no better excuse could be found to reduce or eliminate employee share holdings. Such an elimination forces the employees to pay an added cost by forcing them too pay yet another level of "service provider" which will collectively increase the overhead costs that in the long-term will exceed the costs of Enron type events (i.e. lower overall return). At the same time such a forced choice will eliminate virtually all of the ownership rights of these employee investors.
401K Shareholders need to act swiftly and collectively to forcefully
protect their rights to have an empowered ownership rights in the companies
they work for. This group needs to combine with institutional investors
and other stake holders to create the empowered self policing that is the only
way to prevent things like Enron. Interested parties should take a look
at www.votepal.com www.ourunion.org and call me at 520-742-5168 <rerailer@earthlink.net> or
Steve Nieman at 360-687-3187 <stevenieman@mac.com>
--------------------------------------
401(k) Plans Limit Company Stock
Wall Street Journal © 2006
Facing Lawsuits in Post-Enron Era, Employers
Change Rules to Push Workers to Diversify
By JEFF D. OPDYKE
May 31, 2006; Page D1
Facing a slew of worker lawsuits, companies increasingly are limiting how much of their stock can be held in employee 401(k) retirement plans.
Company stock in 401(k)s is still widespread, despite the lessons of Enron Corp., whose 2001 collapse depleted the retirement savings of thousands of employees. Many companies use stock to match employee contributions to retirement plans, and workers often are barred from selling the stock for many years. Some workers also buy the stock to participate in their company's growth, or because they aren't sure where else to invest.
But dozens of lawsuits since Enron have highlighted companies' legal liability when their stock declines in value, a development that also has helped to drive up insurance costs.
"We're now telling companies they need to understand that company stock in the 401(k) plan is just a lawsuit waiting to happen," says Michael Weddell, a retirement consultant at Watson Wyatt Worldwide, a consulting firm that advises companies on retirement plans.
Last month, Bristol-Myers Squibb Co. notified employees that the drug maker will no longer contribute company stock to its 401(k) plan, starting July 1. Instead, company contributions will go into a money-market fund run by Fidelity Investments. Health insurer Cigna Corp. last fall began allowing workers to immediately roll out of company stock and into one of 22 other options in the 401(k) plan, including mutual funds. Previously, Cigna employees had to keep their shares until they either left the company or reached age 55.
Some companies are banishing their stock from retirement plans altogether. Too Inc., parent of nationwide specialty retailer Limited Too, required its employees to sell any company stock they held in their 401(k) plan by last fall.
"When you look at the background that has been laid by Enron, our human-resources group in conjunction with our counsel suggested that company stock might not be the most appropriate way to have our employees position their nest egg," says Robert Atkinson, a Too spokesman.
A recent survey of 227 large companies showed that 17% of the companies now limit how much company stock a worker can own and an additional 13% of the companies plan this year to impose such restrictions, which could include setting a cap on these holdings, according to Hewitt Associates, a human-resources consulting firm.
Financial advisers say employees should hold no more than 10% of their overall retirement savings in their company's stock, in order to keep a diversified portfolio. Indeed, the Department of Labor limits to 10% the amount of company stock a company can hold in a traditional pension plan, although there are no rules governing 401(k)s. "Your current income is already tied to your company. You don't want your retirement assets wiped out, too," says Damon Silvers, associate general counsel for the AFL-CIO labor group, which has been encouraging its members away from investing in their companies' stock.
Overall, roughly two-thirds of the 500 largest companies offer their own stock as an investment option in their 401(k) retirement plans, according to the Profit Sharing/401(k) Council of America, a nonprofit advocacy group. Company stock represented about 15.4%, or $305 billion, of all 401(k) assets as of 2004, the latest data available from research firm Cerulli Associates. Some companies include direct holdings of their stock in a 401(k), while others put the stock into designated funds.
And many workers hold well in excess of the 10% recommended level. Employees with access to company stock in their retirement plan have, on average, nearly 27% of their money there, according to the Investment Company Institute, an association of investment companies. A bill introduced in the Senate, which would allow 401(k) participants to sell off company stock after three years, could, if approved, help reduce that stock concentration.
For employers, using stock to match worker contributions to 401(k)s offers several benefits, including lower costs. Companies often use shares that they already own in their corporate treasury, which allows them to take the same tax deduction as they would if they paid cash, while preserving their cash for other purposes. Handing out stock also is seen as giving employees an economic tie to the company's success.
Companies now must weigh those benefits against the cost of potential lawsuits, most of which allege breach of fiduciary duty related to losses suffered in the 401(k) when the company stock dropped in value. Williams Cos. last fall paid $55 million to settle such a suit brought by employees. The big energy company has since removed company stock as a 401(k) option for its 4,000 eligible workers. The company denied wrongdoing. Still, offering company stock in a 401(k) is "an expensive and potentially risky proposition," a company spokeswoman says.
Other companies that have settled similar employee lawsuits include Bristol-Myers Squibb, which paid $41 million last year and denied any wrongdoing. Cigna's agreement to allow employees to sell their company stock settled a lawsuit employees brought against the company without any monetary payment. Two weeks ago, Krispy Kreme Doughnuts Inc. offered to pay $4.75 million to settle a similar lawsuit. Krispy Kreme, which denied any wrongdoing, continues to offer company stock as a 401(k) investment option.
Coca-Cola Co., which uses stock to match employee contributions to its 401(k), is being sued by workers claiming the company should have taken steps to eliminate or reduce the amount of company stock in the plan. Coke's 401(k) plan held assets of $1.33 billion at the end of 2005, with 57% of that money in Coke stock, a company spokeswoman says. Coke also has a traditional pension plan with $1.9 billion in assets at the end of last year, of which only 3.4% of the money was in Coke stock, she says. Coke declined to comment on the lawsuit or on the company's retirement plan other than to say that the plan's features are "continually under review."
The litigation is driving up insurance costs. Chubb Corp., a major provider of fiduciary liability insurance, says it has been raising premiums and deductibles sharply in the past two years to cover company retirement plans. A typical policy that would have cost $100,000 a year two years ago is now priced around $500,000, a Chubb spokeswoman says. What's more, companies that were buying coverage of $25 million to $50 million two or three years ago are now routinely buying in the range of $100 million coverage, she says.
Some companies have sought to reduce their liability risk by distancing themselves from decision making in their 401(k) plans. These companies have hired independent fiduciaries to oversee the company-stock component of the 401(k). The fiduciaries work solely for the benefit of the employees, and have the power to limit employee stock purchase in the plan or, in an extreme case, unilaterally sell the shares in the plan. Traditionally, in contrast, company executives have served as plan fiduciaries.
Write to Jeff D. Opdyke at jeff.opdyke@wsj.co
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From: stevenieman@mac.com
Subject: Fwd: US DOL EBSA wants the Ownership Union® to help train them
Date: May 26, 2006 9:28:26 AM PDT
To: assetownership@mac.com
Subject: US DOL EBSA wants the Ownership Union® to help train them
Hello All,
I encourage you to release the shareholder vote totals earlier than the 10Q in August. I would put out a press release, and announce the news to the workers on company media. It could be a sidebar; nothing dramatic. Although the almost 100% vote of the shares cast at the meeting for the two board-sponsored proposals –– I believe this is unprecedented. This IS dramatic.
We have published rudimentary numbers on votepal at:
http://www.votepal.com/2006Contest/06votetally.html
Good news for the stockholders; good news for corporate governance. Good news for the AAG, IF company management recognize the possible increased risk of hostile takeover (especially with a billion in cash lying around), and work with stakeholders to ensure a proper, on-going anti-takeover defense based on continued corporate governance involvement of the various stakeholder groups at the AAG. AAG stockholder activists are considering running another shareholder proposal to amend the AAG's certificate of incorporation at the 2007 meeting to come up with a new version of a "minority" staggered board composed of strategic stakeholder directors. I would be curious to how stockholders and ISS would receive this suggestion/idea.
Myself and many other plan participants are also interested in acquiring, for the first time, the 401(k) vote in as much detail as possible –– and publishing it. I believe these numbers will show that the workers have been disenfranchised from the "system," which the trustees must be concerned about.
The US DOL EBSA contacted me after the shareholders meeting, and has invited me to meet with them and arrange ways for their staff to be properly trained regarding the ownership/proxy rule rights of 401(k)-ers. They also expressed a wish that this training be co-conducted with the US SEC. I have contacted the SEC, and am trying to bring about this arrangement.
Would a trustee of the AAG's 401(k) plans be interested in joining in this training? This would be an excellent chance to possibly develop a nationwide standard for how all 401(k) workers could become more involved in the administration of their pension plans, including representation on corporate 401(k) trustee committees.
Let me know if you're interested. The initial meeting will be sometime in July. I'll forward the date(s) when it's set up.
Let's continue to build on governance events at the AAG over the last four years. I believe it will help strengthen our companies.
Regards,
Steve
P.S. I saw the EXCELLENT article on OYH regarding the stockholders meeting this year. Too bad it's not available for AS workers/stakeholders to read. This article is a good start to begin ongoing and recurrent training for AAG stakeholders regarding how are companies and owned and governed... And how changes can be peacefully and productively made without labor/management unrest.
Hello Bill and Jeff,
We rode in with a Skywest/United contract crew from the hotel to the airport in EUG two days ago.
As I usually try to do with workers and customers from other companies in our industry, I started asking questions to learn what's new, if anything, about how they're trying to hold down their fixed costs.
The captain said that Skywest does not match 401(k) contributions with Skywest stock; the company matches with cash. If this is true, the AAG is definitely in a better position in this area. Matching with corporate stock is much cheaper for the corporation. If we keep growing and issuing more shares, it's practically free, unless workers move out of that stock because there's no incentive (or proper education) to hold it.
I asked if they had any type of stock plans for workers. He said that they currently had a stock option plan that kicked in after two years, where all workers were annually issued options to purchase stock at the current market price when the option to purchase was issued (which, of course, is required by securities law).
He said that that "benefit" really wasn't one, because Skywest's stock price was gradually going downward, making the options worthless. (I didn't learn what length of time frame the option to purchase was good for).
He said that the company was addressing a fix, however. The fix being that Skywest was going to start issuing stock grants for certain periods of time of employment. Not just for pilots, either, but all Skywest workers.
If this is true (you guys can verify this; I will too by talking to more Skywest workers), and they use this to NOT raise their fixed hourly costs –– the AAG is put in a huge disadvantage against one of our biggest competitors (Horizon's anyway). Exchanging "capital wages" for ever-climbing fixed hourly wages is something I've have been passionately urging to any AAG stakeholder who cares to listen. We have also discussed this with ISS and AAG institutional investors.
Skywest is primarily nonunion. So this change did not have to "cleared" through any bargaining unit, per say, I assume.
In my book, stock plans have to be equal across the board. Stock grants should be the same for all full-time workers, with maybe one other level for workers less than full-time but working at least half-time. Only by workers ALL working together does the stock price remain stable and climb over time. If everybody has an equal stake, I believe this helps. If the pilots, for example, are given more (which is the case I believe at Jet Blue) –– this is a mistake. Differences in market-base salaries for different jobs, obviously will compensate workers properly for their level of skill, training and contribution to the firm.
We can't sit still on this front. But it ain't going to be easy convincing the unions –– BECAUSE they take their income only from a percent of hourly wages. This applies relentless pressure each contract time to raise fixed hourly wages until AAG companies become non-competitive.
That's one of the reasons why some of us concerned stakeholders started the Ownership Union®. And we believe if the AAG did business with OU®, this problem could be addressed.
Hopefully, you're still considering this option.
Regards,
Steve