Randell Young, small-business owner and blues guitarist, got angry about the power abuses and waste that he believes typify many large companies. So, about six years ago, he attended a meeting in Palm Desert to hear oilman and corporate financier T. Boone Pickens speak. Young joined Pickens' nascent United Shareholders Assn. and has never looked back. He has become a fixture at annual meetings of companies his association has targeted as light on shareholder rights. Young, 38, spoke with Times staff writer Anne Michaud.
Are there other people in the shareholders association who are speaking out at annual meetings?
Not in this area. But in other areas of the country, yes. We have members who propose various shareholder initiatives, and we assist them to get all the proxy materials and go through the (Securities and Exchange Commission) screening process. We also assist them by providing someone who will present the proposal at the meeting.
Is this is your first year doing this?
No, this is the third year. The first year, I spoke at National Education Corp. Last year, I spoke at Northrop. This year, I spoke at Southern California Edison, Allergan and Community Psychiatric.
Did any of your proposals go through?
The shareholders of Community Psychiatric voted 55% to 45% to accept a proposal to adopt a confidential voting plan. (This would prohibit management from knowing how a shareholder votes on a given issue.)
When you speak at an annual meeting, you're really intending to influence the next meeting. Because, by the time they have the annual meeting, pretty much everybody's voted. They've already filled out their proxy and sent it back in.
For most prudent people, their thought process has been stimulated. Then they'll go and do some research, and realize that a shareholders' rights plan (also called a poison pill) really is a management entrenchment device. And so next year, if you have that same initiative on (to eliminate the poison pill), they'll vote for it.
So, will you return, for example, to Allergan's annual meeting next year?
Generally, it's done in private. We work out a compromise. Management does not want a lot of attention focused on them. They'd rather work out a compromise and not have it on the ballot.
Are you bringing up other issues besides the confidential voting?
Yes. At National Education Corp., I spoke on the poison pill issue. Executive compensation is also a big issue now, and the media has picked up on it.
You have had some really obvious abuses, where you've got chief executives laying off workers and, at the same time, the board is allocating them large bonuses. It shakes the public's sense of propriety. It's an obvious out-of-whack situation.
As shareholders, we're also concerned with the dollar amounts that the chief executives get paid. As long as their pay is linked to performance, we don't have a problem with how much they get paid.
But don't you need a strong management to ensure a company runs well?
Well, we're not talking about shareholders providing management with advice on specific, day-to-day themes of how to run the company. Obviously, you're paying management to run the company, they're there day-to-day, and they need to develop the strategy. Where the problem comes in is when management fails to perform, and shareholders have no way to get rid of them.
So is that the ultimate goal, to make a change in management when a company isn't doing well?
The ultimate goal is to enable the shareholders to have the tools to hold management accountable. That doesn't mean that we're advocating some big upheaval, changing all the management. We want to see the best people in those positions. We want to see a meritocracy.
If there's competition for jobs on the level of janitor or salesman or engineer, there should also be competition for jobs at the level of top management.
They should have to compete to be there, and by and large they don't. They compete to get there. But once they get to those top management positions, the way the proxy system is set up, it's very difficult to make any changes.
How did you get involved with the United Shareholders Assn.?
I don't have a (master's in business administration). In fact, I don't even have a bachelor's degree. But I'm somewhat successful in business, and I have a perspective that comes from a non-conventional, non-academic background. I'd read a couple of articles on Boone Pickens, and what he was talking about made sense to me.
I do what I can because, to me, it is an issue that affects everybody. If you don't have a free market for corporate control, you can do a tremendous job as a worker and still be out of work. Not only does that affect you, but if you're out of work, how are you going to come in my restaurant and spend money? You're not. It affects everybody.
Would you ever take your company public?
Sure. When you go public, if you time it right, you make a fortune. But then you are an employee. So you have to accept that you must perform at a level competitive with whoever else shareholders could hire to do the job. Or you have to get out. And I would accept that.
One great thing about Boone Pickens is that he talks the talk, and he walks the walk. In his company, you don't have a staggered board or a poison pill or a golden parachute program. You do have confidential voting of shares. In other words, the standards he sets for other managements, he lives up to himself.
On job security for chief executives. . .
"Top corporate management shouldn't have a whole lot of job security. They're getting paid a lot of money. If they can't perform, they need to step aside for someone who can."
On shareholders holding management accountable. . .
"If you're a chief executive and you know that if you don't perform, you're out, then you're going to be focused. If you know you're there until you retire, where's the incentive?"
On hostile takeovers. . .
"I don't like the word 'hostile' takeover. It's only necessarily hostile to management. It's friendly to shareholders, who are paid a big premium."
On educating shareholders. . .
"Once you know the facts about management entrenchment devices, you realize that these are clearly not in the interest of shareholders."