Copyright © 1996, LENS Inc. All Rights Reserved
Comments to webmaster@lens-inc.com
Atlanta, GA
May 14, 1992
One year ago, at the last annual meeting, I said that the one point I wanted to make was that Sears had effectively protected itself from having to answer hard questions. With the same man serving as Chairman, CEO, CEO of the largest (and least successful) operating division, trustee of the largest block of stock and even head of the nominating committee that selected new board members, what we had was a man who marks his own report card. Despite the fact that he has not met his own goal of 15 percent ROE once in the last 10 years (hardly even come close), Ed Brennan was giving himself pretty high marks.
A year later, he is still Chairman, CEO, and head of the merchanising division. He still has not delivered a 15 percent ROE. The Sears merchandising division was sinking from number 1 to number 3. At this meeting a year ago, he promised to put new outside directors on the board. He still hasn't done so -- but deep within the proxy statement you can find the news that he still plans to do so -- he uses the term "elect" but what he intends to do is appoint them, without putting them to a shareholder vote. This is worse than an Albanian election -- there may only be one candidate, but at least they get to vote.
Why are these shareholder proposals so important? What are we asking for? What is it that causes us to come thousands of miles at a cost of thousands of dollars of our own money?
Because this just isn't right. There must be some way to respond to this overwhelming effort to stonewall the objections of shareholders who have had ten years of broken promises. (If we get the statistics about $100 in Sears vs. $100 in Walmart, insert them here.)
We are the owners of Sears, Roebuck and Company and we are asking the most basic elements of accountability. We are asking for the most basic and the most essential attribute of ownership, true confidential voting, the right to express opinion free of the possibility of coercion or reprisal. This is the right guaranteed to all citizens of the United States in the exercise of political rights; it is accorded to the shareholders of Exxon, IBM, General Motors and other leading corporations in the exercise of their shareholder rights. I have looked shareholders in the eye as they told me they could not vote with me due to fear of coercion. As the former Chairman of a major fiduciary bank, I have felt it myself. Even the most conscientious and courageous shareholder cannot risk the commercial suicide of opposing a substantial potential customer. No vote can be meaningful as long as the company can retaliate. Why won't Sears give its shareholders have the dignity and full protection of true confidentiality? A more difficult question is why our management would advertise that it has adopted a policy of confidentiality, when the fine print says that it doesn't apply in a proxy contest, the one situation where it makes a difference?
What does it mean when management announces an objective and then fails to achieve it for every one of ten years? In the interest of honesty, should the objectives be lowered? Should there be some consequences for this failure to meet their own goals, some increased accountability? Two of the shareholder proposals, the proposal to separate the Chairman and the CEO and the proposal for annual election of all directors will make a difference. These are changes that make questions more likely.
Should there be a change in the corporate strategy? What does it mean when the board opposes an independent study, by a firm of their own choosing? To me, it demonstrates yet again that they just don't want to respond to any questions.
Who are the directors? Won't it make a difference in their attitude toward shareholders if they have some minimal shareholding themselves, not the 100 shares a year they are given but shares purchased with their own money? That is the purpose of the last of the resolutions.
Sears has a slogan: "You can count on us." We want to hear the board say that to the shareholders. We want to see the board earn that trust. The resolutions currently presented by five different and diverse shareholders and groups demonstrate a high level of concern, even dissatisfaction. We want better. We are tired of waiting. And until we see some change, we will keep reminding you -- you can count on us.