Was I wrong about Black & Decker?

By Dominic Jones

IN A recent post I called out Black & Decker Corporation (NYSE: BDK), one of the highest rated companies for corporate governance among U.S. large-caps, for ignoring its annual meeting on its website.

In that post, I said Institutional Shareholder Services was wrong to say BDK’s governance practices are better than 99% of S&P 500 companies. I based my criticism on the fact that the company provided no information about the proceedings of its April 19 annual meeting on its website. The company did not webcast the meeting and it did not post preliminary voting results.

Roger Young, Black & Decker’s vice president of Investor and Media Relations, responded to that post via email. Unfortunately, I never saw his email until earlier today when he resent it. This is what he wrote on April 23, shortly after the original post appeared:

“I read your IR web report posting on Black & Decker’s annual stockholder meeting. I have a few comments:

1. We hardly “snub” our shareholders. We properly notify them of the meeting, and it is posted on our website in the annual report, the proxy and in the FAQ section. I will consider posting it on the “Dates & Events” page in the future.

2. We run a streamlined meeting format that is usually very brief. Honestly, it would not merit webcasting. If we did webcast it, I think shareholders would be annoyed that we wasted their time.

3. We will include the voting results in our 10-Q as required. This year there were three items up for vote: election of directors, ratification of the public accounting firm and a non-binding shareholder resolution. We believe that these do not merit a press release before the 10-Q is filed.

4. We take responsiveness to shareholders very seriously. In my five years in investor relations, I do not recall a single call or email from an investor asking about the voting results. This indicates to me that the demand for further disclosure is minimal.

On your website, you often decry the “one size fits all” approach to IR websites. The same mentality should apply to issues like this–it does not make sense for all companies to webcast their annual meeting.”

Was I wrong to say that BDK should webcast its annual meeting and post voting results immediately after the meeting? You can make up your own mind, but here’s why Roger’s response doesn’t change my mind one bit.

Part of the reason BDK’s annual meeting is a mere legal formality is because that’s what the board and management have decided it should be. It’s a chicken and egg situation.

If BDK was proactive and used the meeting as a way to provide a forum for all shareholders to participate in the affairs of the firm, it could be a very effective event for the board, management and shareholders. It would be a practical demonstration that BDK does indeed respect its shareholders — even if shareholders themselves aren’t demanding to be respected.

Corporate governance is about more than policies, closed-door meetings with big shareholders, and an Institutional Shareholder Services rating. It is about the company doing the right thing — even if no one else cares. So, even if no one comes and it’s a streamlined event, webcast the event so that everyone knows that is what it is.

Secondly, the agenda for the meeting included a shareholder resolution from the United Brotherhood of Carpenters and Joiners of America Pension Fund calling on the company to put in place a “pay-for-superior-performance” plan at BDK. I would hardly call that, or anything else on the agenda or any questions that were posed, “a waste of time.”

And while it might be a “non-binding” resolution, it’s still an important and possibly contentious one. It suggests at least some shareholders are concerned about pay practices at the company.

Just what proportion of shareholder votes think pay is an issue at BDK is not known right now because the company won’t disclose the poll results until it files its 10-Q “as required.” Nothing prevents the company from releasing the voting results before it files its 10-Q, except its willingness to do so.

Doing only what is “required” is not enough. It’s the same as doing the minimum allowed. I think shareholders of companies rated as corporate governance leaders should be getting more than that.

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