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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (214612)	1/15/2003 9:43:54 AM
From: Lucretius	Respond to of 436258

lol....

To: Knighty Tin who wrote (214612)	1/15/2003 9:56:58 AM
From: JHP	Read Replies (1) \| Respond to of 436258

Publicity-shy Fidelity chief hits plan for fund-vote disclosure By Peter J. Howe, Globe Staff, 1/15/2003 Taking an unusual public stand, Fidelity Investments chairman Edward C. Johnson III yesterday joined with his counterpart at rival mutual fund giant Vanguard Group to oppose a Securities and Exchange Commission proposal that would make mutual funds disclose how they vote on corporate shareholder ballot questions. Besides creating a huge paperwork burden, Johnson said the measure could expose Fidelity and its portfolio managers to political campaigns aimed at lobbying them to vote certain ways on proxy questions affecting companies in which Fidelity funds own stock. Those could distract them from maximizing returns for investors, he said. With the SEC set to vote as soon as next month on the rules, which it proposed in September, the usually publicity-averse Johnson and Vanguard chairman John J. Brennan wrote a column yesterday in The Wall Street Journal opposing the plan. ''It's really the politicization that is our primary concern,'' Johnson said in a Globe interview. ''We feel that it is simply not going to work to the best interests of our fund shareholders. ... We really don't feel that the process should be made into a political process.'' Johnson noted that Fidelity has an extensive, publicized set of guidelines for how its fund managers should vote on questions that are put typically once a year to owners of stock in publicly traded companies. The guidelines include supporting measures such as stock-option plans that seek to link the interests of corporate executives and shareholders, opposing ''golden parachute'' pay packages for outgoing executives, and usually opposing ''poison pill'' measures to thwart corporate takeovers. As part of a wide-ranging effort to improve corporate governance and accountability to shareholders in the wake of scandals including the Enron and WorldCom bankruptcies, the SEC in September floated a plan to make mutual funds and other investment advisers publicize how they vote on shareholder proxy questions. SEC spokeswoman Christi Harlan said yesterday the agency would not comment on the Johnson-Brennan statement. But she said that ''the commission would like to take up'' the mutual fund proposal ''hopefully sometime early in February'' after reviewing thousands of public comments. Outgoing SEC chairman Harvey L. Pitt, speaking to mutual fund managers last Wednesday, said, ''Mutual fund securities are held for the benefit of the individuals who own fund shares. The voting power these securities represent carries the ability to influence the governance of US companies.'' Pitt said he was concerned that ''many mutual funds and investment advisers don't have specific policies to guide them in voting portfolio securities; those that have them rarely disclose their policies; and fewer yet enable shareholders to learn if their voting policies were in fact followed. Many wield voting power in the face of conflicts. They may cast votes furthering their own interests rather than those for whom they vote.'' The SEC proposal has drawn support from many shareholder activist groups, as well as the AFL-CIO and New York Attorney General Eliot Spitzer, who has emerged as a leading crusader against Wall Street corporate fraud. Many so-called socially conscious funds make public how they vote, including Domini Social Investments, which began the practice in 1999, and the Catholic Christian Brothers Investment Services. Johnson, however, said that Fidelity already has strong policies in place governing how it votes on proxy questions. Just as a matter of disclosing how it votes on questions affecting well over 1,000 companies in which its funds own stock, ''You're talking about tens of thousands of pieces of paper.'' Fidelity has estimated that it might have to disclose as many as 300,000 separate votes every year in SEC filings, at a cost that could run well into the millions of dollars. Johnson said Fidelity does not always vote the way company directors urge shareholders to. ''In extreme cases, we vote against management,'' Johnson said. ''On the percentage basis, I really can't tell you. If we disagree with management, we vote against them.'' Without citing specific cases, Johnson said Fidelity often relies on behind-the-scenes negotiations with corporate leaders. ''We may see something on a proxy statement that we don't like and talk to the company,'' Johnson said. ''In a number of instances, compromises have come out, and they work to everyone's benefit.'' ''If you put it in the public domain, it immediately leaves many issues open to various pressure groups who have a self-interest that is different from the interests of the fund shareholders,'' Johnson said. Fidelity's public guidelines, available at its Web site, outline its views on several common shareholder questions such as voting rights, stock-based compensation, and corporate takeover policies. But, the fund giant says, ''No set of guidelines can anticipate all situations that may arise. In special cases, Fidelity may seek insight from our portfolio managers and analysts on how a particular proxy proposal will impact the financial prospects of a company, and vote accordingly. The guidelines are just that: guidelines - but they are not hard and fast rules, simply because corporate governance issues are so varied.'' Peter J. Howe can be reached at howe@globe.com. This story ran on page D1 of the Boston Globe on 1/15/2003. © Copyright 2002 Globe Newspaper Company. 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