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Many investors want to be able to define issues themselves. If practical to do so, many fund managers would prefer to present their own definition of issues to be addressed rather than rely upon agents – whether proxy advisors or activist funds – to determine what investors should consider.

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Fund managers may consider it their responsibility to determine what is required for informed decisions. Based either on legal definitions of fiduciary duty or on client expectations of professional expertise, some fund managers feel obligated to exercise independent judgment about what is relevant in their investment decisions.

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Both investors and corporate managers should be able to understand the views of all significant investor constituencies. Aside from wanting to know who is winning a contest, anyone concerned with analyzing alternatives may benefit from learning the views of others with different perspectives.

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Corporate managers need to know what concerns long term investors. While the views of all shareholders should be considered, the interests of long term investors who rely upon the development of future enterprise value are likely to be most relevant to a company officer’s or director’s fiduciary responsibilities for the corporation and its stockholder interest.

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Issues defined by long term investors are important to the marketplace. The influence of investors concerned with long term enterprise development is essential to the viability of financial markets, and to their purpose of allocating capital productively.

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Investors must be able to choose between anonymous and attributed communication. Privacy rights and the sanctity of voting processes are of course important to all investors, but it is especially important for larger shareholders to be able to choose whether they want the benefits and burdens of leadership recognition or the ability to ask questions without being identified as the source.

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Cost: The most obvious obstacle to independent investor initiations of issues has been cost, since even relatively modest expenses incurred by one investor effectively impose a penalty on responsibility if the resulting benefits are distributed equally among all the other shareholders, including rival fund managers whose performance statistics have not been reduced by the burdens of leadership. What we need, then, is a very practical way to deliver the required services as a reasonably priced, value-justified alternative to a seemingly free activist service.

Current discussions are focused on the Forum’s providing the required processes in relatively inexpensive steps, assuming that issues might be defined and addressed at early stages without any need for the initiators to fund full scale programs. We are also considering policies to accommodate multiple initiating investors for a subject company, although it is not yet clear whether this can be done in a practical process that avoids questions about the investors acting in concert.

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Qualification for investor initiation: The theoretical ideal of completely open access to all investors must necessarily be balanced with the need for order. Qualification should be based on verified legitimacy of the investor, whether identified or anonymous, and of the issue to be initiated. The criteria for both investor and issue legitimacy must be strictly objective, and not based on popularity. Our objective is to assure that a Forum-supported investor initiation of an issue is responsibly presented and merits serious consideration.

Suggestions for qualifying issues have included variations of review panels and validating endorsements by other investors or organizations. Any solution will necessarily have to be simple and efficient, considering our objective of making support readily available as well as the need to minimize costs.