The Corporate Attack On John Chevedden

What do Gibson Dunn, Bryan Cave, Latham & Watkins and Messner & Reeves have in common?

They are representing big corporations.

And they are all suing John Chevedden.

John Chevedden is a shareholder activist in Redondo Beach, California.

He’s a believer in shareholder democracy.

He holds stock in about 80 companies.

And he files about 100 shareholder proposals a year.

Some make it on proxy ballots. Some don’t. Some are approved by shareholders. Some are not.

Historically, the Securities and Exchange Commission (SEC) would be the venue for these proposals. Activists would file. The companies would object. The SEC would decide as to whether the proposal would go on the ballot.

The companies didn’t like it when the SEC would side with Chevedden.

So, a couple of years ago, the companies decided to start suing Chevedden in federal courts around the country in an effort to intimidate him.

Chevedden is defending himself in courts around the country – Boston, St. Louis, New York, and Denver.

Prior to last year, Chevedden was sued four times — and lost all four based on technicalities, he says.

Within the last two months, he has been sued four more times.


“Bullying and intimidation,” says Corporate Governance editor and Chevedden ally James McRitchie. “The companies are losing at the SEC. So they are going to federal court.”

“Maybe they smell blood,” Chevedden said in an interview with Corporate Crime Reporter last week. “Maybe they have been emboldened by quasi success in the earlier lawsuits.”

Chevedden is one guy throwing darts against some of the most powerful corporations in the world. And the giants can’t stand even the mildest of pinpricks. So they are lashing back.

Why are they picking on Chevedden?

“Well, if they went out and sued a religious order or a union, that wouldn’t look good,” Chevedden said. “They would get greater blowback than if they picked on an individual.”

Chevedden says he files about 100 corporate proposals a year. He says he owns stocks in about 80 corporations. Since he started his shareholder activism, he has filed more than 1,000. He estimates that about 20 percent to 30 percent of them have passed.

Chevedden says his proposals fall into about ten categories — elect board members every year, instead of every three years, require a majority vote — instead of a plurality — for members of the board, require an independent board chairman, majority voting requirements, as opposed to supermajorities, allow shareholders to call meetings, confidential voting so that executives can’t see who is voting and how, cumulative voting, require directors to retain company stock for a period of time, and limit accelerated pay in the case of a merger or buyout.

What impact has Chevedden had on corporate America?

“Improved governance,” he says matter of factly. “These proposals have been adopted by many companies. Some of the ones that get big votes — like declassify and simple majority voting — when I go back to companies that have adopted these, they will point out that they have improved their governance by adopting these proposals, as if they did it without my suggesting it, and therefore they don’t need any more improvement. They are so good they don’t need to get any better.”

How many annual meetings does he go to a year?

“Five to ten,” Chevedden says. “But I have to make sure somebody is at these meetings. That’s one of the requirements — that the proposals be presented at the meeting.”

There is no financial incentive in this for you, is there?

“No,” he says.

Do you get a thrill out of getting a big vote?

“Yes,” he says. “That’s one reason.”

What’s another?

“It improves the governance of the companies.”

You are a believer in corporate democracy?


Who else is in the shareholder activist space?

“There are groups that do it,” he says. “Unions. Investment funds. Religious orders. There is the Interfaith Center for Corporate Responsibility. I share information with them. I am in contact with various unions also.”

Are the companies trying to knock you out of the game?

“Sure,” he says. “And anyone else trying to put in a good proposal.”

[For complete Interview with John Chevedden, see 28 Corporate Crime Reporter 6(13), February 10, 2013, print edition only.]

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