Shareholder proposal that triggered Apache to sue small shareholder

Shareholder proposal that triggered Apache Corp., Houston, (APA) to sue small shareholder

[APA: Rule 14a-8 Proposal, November 8, 2009]
3 [Number to be assigned by the company] – Adopt Simple Majority Vote
RESOLVED, Shareholders request that our board take the steps necessary so that each shareholder voting requirement in our charter and bylaws, that calls for a greater than simple majority vote, be changed to a majority of the votes cast for and against the proposal in compliance with applicable laws. This would include the 80% of shares required to amend articles ninth (directors); twelfth (business combination); fourteenth (fair price); and sixteenth (written consent) of our charter.

Currently a 1%-minority can frustrate the will of our 79%-shareholder majority. Also our supermajority vote requirements can be almost impossible to obtain when one considers abstentions and broker non-votes. Supermajority requirements are arguably most often used to block initiatives supported by most shareowners but opposed by management. For example, a Goodyear (GT) management proposal for annual election of each director failed to pass even though 90% of votes cast were yes-votes.

This proposal topic won from 74% to 88% support at the following companies in 2009: Weyerhaeuser (WY), Alcoa (AA), Waste Management (WM), Goldman Sachs (GS), FirstEnergy (FE), McGraw-Hill (MHP) and Macy’s (M). The proponents of these proposals included Nick Rossi, William Steiner, James McRitchie and Ray T. Chevedden.

The merits of this Simple Majority Vote proposal should also be considered in the context of the need for improvements in our company’s 2009 reported corporate governance status:

The Corporate Library www.thecorporatelibrary.com, an independent investment research firm, rated our company “D” with “High Governance Risk” and “Very High Concern” regarding our board members. Eight of our 11 directors had 12 to 28-years tenure – independence and succession planning concerns. Six of our directors were age 71 to 81 – adding to succession-planning concerns. Francis Merelli, John Kocur and Patricia Albjerg Graham were inside-related – another strike against independence. Plus Ms. Graham received our most against-votes with 25% and Eugene Fiedorek had 15% against-votes.

Our CEO Steven Farris was granted 2008 restricted stock units with a grant date value of $34 million. These restricted stock units provided rewards whether our stock price was rising or falling. Plus there was company payment of executive personal income taxes.

We also had no shareholder right to call a special shareholder meeting, act by written consent, annual election of each director, cumulative voting, an independent board chairman or a lead director. We had a poison pill locked in until 2016. Shareholder proposals to address these topics have received majority votes at other companies and would be excellent topics for our next annual meeting.

The above concerns shows there is need for improvement. Please encourage our board to respond positively to this proposal: Adopt Simple Majority Vote – Yes on 3. [Number to be assigned by the company]
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Notes:
John Chevedden, Redondo Beach, Calif. sponsored this proposal.