The following guidelines are designed to make CWA shareholder campaigns more effective, and to protect CWA and participants from potential liability for actions in connection with such campaigns, by assuring compliance with the federal laws and regulations that govern proxy solicitations.
I. CWA Shareholder Activism and Applicable Rules
CWA has assisted members and pension funds in submitting shareholder proposals that are being submitted to a vote of shareholders at company annual meetings. CWA is also engaging in proxy solicitations to ask institutional investors and members who own stock to cast their votes in favor of shareholder proposals that CWA has decided to support and/or to vote against the re-election of incumbent directors. This kind of activism requires that we comply with certain rules and regulations that the Securities and Exchange Commission has adopted under the Securities Act of 1934.
II. Two Important Requirements Concerning Proxy Solicitations
A proxy "solicitation" includes any request that a shareholder vote for or against a proposal that will be voted on at a shareholder meeting, or for or against the election of a director. As a result, CWA and its representatives must comply with certain requirements whenever shareholder support is sought for such votes, whether the request is made in the form of a letter, a flier, a website posting, a newsletter story, a slide show, an oral communication, or by any other means.
The two principal requirements for successful CWA activism are:
- maintaining the ability to rely on an exemption from the more detailed and costly regulations that apply to management proxy solicitations; and
- assuring compliance with certain antifraud provisions that govern all proxy solicitations.
III. How to Maintain CWA Eligibility to Conduct Less Costly Solicitations
In order to assure that CWA is able to use the exemption from the detailed regulations that govern management proxy solicitations:
- Do not ask for authority to vote, or to act as proxy, on behalf of any shareholder; and
- Do not furnish any shareholder with a form of proxy, including a photocopy of the proxy card that management distributed together with its proxy statement.
If CWA decides to collect proxies for en masse delivery at an annual meeting, the proxy cards must be marked by the shareholders to indicate how they wish to vote, and then signed by the shareholders, before a CWA representative may accept the cards for delivery at an annual meeting. In this situation, CWA representatives should act in a manner analogous to the Postal Service, after letters have been placed in a mailbox. CWA representatives cannot accept delivery of any unsigned or unmarked proxies, vote any proxies that shareholders did not mark and/or sign, or seek authority to attend an annual meeting and vote on behalf a shareholder, without jeopardizing CWA’s ability to rely on the exemption that makes this kind of shareholder activism a cost-effective option.
IV. How to Assure Compliance with the Antifraud Provisions
In order to minimize the possibility of violations of the antifraud provisions, please comply with the following guidelines:
- Legal Review: All requests that shareholder’s vote in a particular way should be reviewed by the CWA Legal Department, or by an approved attorney, before they are published, posted to a website, or distributed to investors by other means, in order to assure compliance with the applicable rules and requirements.
- Drafting Guidelines for Proxy Solicitations: In drafting any request for shareholder support as part of a proxy solicitation, care should be taken that each request for shareholder votes, and any supporting argument, complies with the following points:
- Each request for shareholder votes must explain the nature of the questions that will be presented for a shareholder vote, and the reasons why CWA or a representative of CWA is asking shareholders to vote for or against certain proposals, and/or for or against the election of certain directors.
- All statements of fact must be accurate, and neither taken out of context, nor presented in a manner that might be considered misleading without an understanding of the context; There should be no statement that impugns the character, integrity, or personal reputation of any person, or that makes charges of improper, illegal or immoral conduct, without presenting a strong factual foundation for any such statement.
- Whenever possible, references to the sources of factual statements should be included, either as a part of the sentence, such as "according to the New York Times (April 19, 2007)," or with a citation at the end, particularly where facts that are reported by the source cannot be independently verified.
- All predictions of consequences, or future events that might happen, should be qualified with "could" or "may" instead of using "would" or "will."
- All conclusions or statements of opinion should be qualified with a statement such as "we believe" or "in our view" to make clear that they reflect a judgment or inference and are not statements of fact.
- All requests for shareholder support should clearly state who is soliciting shareholder votes and indicate that additional information concerning the issue or issues involved is available in management’s proxy statement.
- Verbal Statements: Oral presentations that request shareholder support for a particular vote or votes should use letters, fliers, website postings or other materials that have been reviewed by the Legal Department, or an approved attorney, as a "script" for the presentation, in order to assure that any verbal statements are coordinated with approved arguments and comply with the applicable rules.
V. Contact Information
If you need to request a review of any solicitation materials, or have any questions concerning these guidelines, please contact Tony Daley in the Research Department at tdaley@cwa-union.org or 202-434-9515, or General Counsel, Mary K. O’Melveny at maryo@cwa-union.org or 202-434-1234.