"The Precipice of History"

Article excerpt

Shareholders' voices in corporate management just got louder -- at least at Fleming Cos. Inc.

The Oklahoma City-based food marketing and distribution company's top brass were given a bitter pill to swallow Wednesday as shareholders determined that any hostile takeover plans must be put to a shareholder vote.

Anti-takeover plans -- or poison pill plans -- are typically left to the discretion of corporations' directors, but that could be changing in corporate America, and Fleming may be the vanguard. "At stake here is the very notion of corporate governance and the nature of ownership in corporate America," said Michael Kapsa, spokesperson for the International Brotherhood of Teamsters who spearheaded the resolution. But Robert Stauth, chairman and CEO of Fleming found the Teamsters' victory less significant, saying that a takeover of Fleming is unlikely anyway. "This may become a non-issue." The resolution requiring shareholder approval for poison pill plans passed by 60.5 percent. Some 86 percent of Fleming's total outstanding shares were represented at the meeting. "For shareholders' rights, this is a significant advancement," said Bart Naylor, also with the Teamsters. "The institutional shareholders have now joined with the employee shareholders to insist on representation." Poison pill plans are anti-takeover defenses that corporations use to make hostile acquisitions prohibitively expensive. For example, a company, to thwart a takeover, may issue a new series of preferred shares, which give shareholders the right to compel their redemption at a premium price after the takeover. Fleming's dispute with the Teamsters concerning the poison pill issue escalated in September when the union filed suit in the Western District's federal court alleging that Fleming's board didn't have the exclusive say-so in instigating poison pill plans, pursuant to SEC rules. The Teamsters sought the court's declaration that Fleming must put the issue before the shareholders. The Teamsters hold only about 65 of Fleming's 37 million shares outstanding. Prior to their lawsuit filed in September, the Teamsters had submitted a proposal at last year's meeting asking Fleming's board to voluntarily revoke its poison pill provision. Despite the Teamsters' small numbers, their proposal won by a 2-1 shareholder vote. But Fleming's board later voted to renew the provision. In January, Judge Wayne Alley ruled in the Teamsters' favor and required Fleming to include a vote on the issue as part of its April 30 meeting. Fleming's board later voted to voluntarily terminate its plan for the time being. Stauth said that the result of Wednesday's vote is that Fleming now has no anti-takeover provision in place, but he added that Fleming will heed the voice of its stock owners. "The shareholders have spoken and we have listened." Naylor of the Teamsters said that Fleming's poison pill resolution could pave the way for a new era of shareholders' participation in corporate governance. "We're on the precipice of history. …