The WOC Ratio©
By Richard D. Foley
December 17, 2002
The
following includes a shareholder proposal submitted in recent days. Due to restrictions in SEC rules, this
structure inhibits exploring a full explanation of the Workers Owners
Confidence Ratio© concept ("WOC").
Reports will be provided on how this proposal fares with the company,
the SEC, and a possible shareholder vote.
Following the shareholder proposal is an early draft of an initial
effort to expand on the concept.
Your
thoughts, reflections, and input will be greatly appreciated. The design of this tool is open. The final shape will be determined by the
contribution of many. All contributors
will be acknowledged and recognized for their participation.
The
goal is to design an analysis tool to provide useful predictive value on the
future of a company. One of the
functions of the WOC is to establish a standard methodology for measuring
employee ownership and the impact of that ownership on the performance of a
company. We have no doubt that it will
take some time to build a useful WOC model.
One of the biggest tasks will be to develop accurate data on the extent
of employee ownership and the forms of that employee ownership.
What
benefits could an effective WOC provide?
It might be an exceptionally accurate predictive tool. It could encourage reduction or elimination
less productive forms of employee ownership.
It could encourage the creation of the more productive forms. It could provide an early warning indicator
of deteriorating management effectiveness.
It could provide a greater understanding of the benefits and mutual
advantages to be found in cooperation of management, labor, shareholders, and
stakeholders.
We live
in a world of increasing interconnectedness and interdependence. The old models of business are being
revised. The once simple plan of
externalizing costs onto some other organization, people, customers, suppliers,
institutions, society, economy, environment, or geography is no longer a
dependable method of generating enduring returns on capital. We need some new tools to help us understand
the dynamics of the interconnectedness and interdependence. We think that the Worker Owners Confidence Ratio©
could provide one of these tools. Your
participation is greatly desired.
Richard
D. Foley
TFG,
Inc.
6040 N. Camino Arturo
Tucson, AZ 85718
Phone: 520-742-5168 Fax: 520-742-6963
Email: rerailer@earthlink.net
Web
address: www.virtualunions.info
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SHAREHOLDER PROPOSAL No. 5--A NEW
INFORMATIONAL TOOL TO BETTER UNDERSTAND AND ESTABLISH EXTENT OF
WORKER-OWNERSHIP WHILE PROTECTING PRIVACY
Resolve that shareholders of XXXX
XXX, Inc. ("our company") request the Board of Directors determine to
the best of its ability the percentage of all stock owned by our employees, and
report in detail the categories and totals as employee ownership changes.
Current law requires all companies
identify shareholders who own five percent or more of its stock. Today,
institutions own more than 80% of our company. Thus, when compared to that
owned by individual shareholders, the percentage owned by our individual
worker-owners becomes significant. It represents decisions made by investors
with a unique perspective on our company.
This proposal requests ownership
information about rank and file and junior management similar to that currently
reported on board members and senior executives. However, this report should
exclude data of those whose investments are more related to grants and options.
Outside of their 401(k) retirement
plans, the employees of our company can own stock in various ways. Shareholders
need help to understand the range, magnitude and types of worker-ownership.
This report would also serve to inform the worker-owners of the size and
importance of their investment in our company, and could preserve privacy by
using third party surveys.
The 2002 Sarbanes-Oxley Act allows
greater flexibility of our worker-owners to sell their shares in 401(k) plans.
Reported quarterly, this informational tool could provide the number of worker-owners
who would be eligible to sell 401(k) shares. As responsible owners of our
company, we need to understand patterns of employee ownership better.
We need to have an informational
tool which can provide greater understanding of worker-owner confidence in our
company as a viable investment, especially using after tax dollars. Our
worker-owners have an understanding of our company from a unique perspective
compared to ordinary investors. I believe our employees increase or decrease
their percentage of ownership as rational investors responding to what they
perceive the future of our company to be.
Our industry has seen major
companies fail. United Airlines’employees owned a majority of its stock. Unable
to control their ownership structure due to unique circumstances and
constraints, worker-owners were relegated to concerns over wage and work rules.
We will probably never know if United employee shareholders had earlier
liquidated their United holdings in other stock plans.
I believe this proposed tool may
increase the potential for success of our company. Who can deny that
worker-owners should be recognized as assets, or that their knowledge, skills
and perspectives could be better utilized?
In summary:
• Provide
shareholders an informational tool that may reveal the confidence of
worker-owners in our company.
• It
should include data on all types of worker-ownership.
• Do not
include stock of senior executives, board members or others based on grants or
options.
• Privacy
can and must be protected.
This informational tool could
assist in decisions to buy, sell or hold stock in our company.
VOTE YES ON NO. 5
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It is our hope that this type of
shareholder proposal can gain acceptance by the SEC, and that it can be
presented in thousands of companies. We
know that the hopes of brining accountability to corporations have been
frustrated. We believe that a big part
of the reason is that shareholder and investor advocates have failed to
properly include the employee shareholders in the process. We have stood back and left it to organized
labor. We are convinced that won't happen. Unfortunately, too many in organized labor
are fatally married to a failed model.
We agree that unions must be
included, but they are not the missing piece.
It is the individual citizen employee shareholder who must be
engaged. Their engagement can be organized,
but not through a traditional union. It
is our belief that these employee shareholders want to be recognized and
organized. However, they don't want to
be locked into a surrender of their ownership rights to anyone or anything.
We have developed a concept that
we call the "WOC Ratio©." It
stands for "Worker Owner Confidence Ratio©." This could become a standard reporting
requirement. This could become as
important as volume of trades and P/E ratios.
It would have to be standardized.
It could track the swing of employee buying and selling done with after
tax investment dollars. It would
include an accurate report on numbers and percentage of employee ownership in
qualified plans. We believe this is
more useful information than the insider trading and option exercising of
senior executives.
The ability of any management to
work a plan is based upon their interpersonal relationships with the
implementing employees of the company.
There is little in the lives or minds of managers that does not leak out
to their subordinates. We are confident
that long before the final days of Enron the number of employees who wanted to
sell their employer's stock exceeded those who were buying. We believe that the employee owners must be
included oversight structures. They
have not only invested their money, but also their lives in their companies.
Traditional union basis for
functioning is that of an adversarial role.
This won't work in the shareholder equation. What is needed is the ability to demand, based on rightness of
ownership and fairness, access to information and participation in right
action. Studies have shown that
employee shareholders don't want to run the company, but rather desire to do a
good job and have power over themselves to do a better job, and bitterly resent
institutionalized unfairness.
We believe that all humans
instinctively understand fairness. Like
most positive human characteristics, it needs encouragement. Certainly, most people want to be treated
fairly, and are willing to make equal exchanges of such treatment, and
understand the desire for it in others.
Yes, there are those who are corrupted by greed and
self-centeredness. However, we choose
to believe that there is such a thing as enlightened self-interest, this brings
us the full circle to fairness. We believe that the desire for equality and
fairness is as innate as for advantage, and that these two desires can't be
separated. Human beings are the most
social of all creatures. Human invented
systems function on trust and fairness.
We could not drive our automobiles down the street if we were not able
to trust the drivers coming from the opposite direction. Another way to say it is all human systems
operate on an expectation of fairness and trust. The desire for trust and
fairness is the lubricant of human systems.
This is a source of energy. It can be tapped. The first step is to make sure employees can know the true extent
of their ownership. When this block of
ownership is identified, becomes known, then it is a short step to organizing
it.
Powerful sweeping enduring change
requires only a modest shift in perceptions of society's mind toward a
consciousness of
"do-ability/rightness/fairness/whynotness/Iwantit/wemusthaveit/letsdoit/done."
Please, lend your talent to making the WOC Ratio© become a reality. You are free to share this concept with anyone you think can assist in improving it. We thank you in advance. RDF
5/2/03 Additional Note:
The essence of the WOC is in one of the shareholder
proposals that made it through SEC review. We will hopefully, be
receiving SEC approval and filing our definitive proxy materials on the SEC
Edgar web site in early May 2003. Until then, we are somewhat restricted
in what we can say that could be considered as "solicitation." I can
tell you that anyone can go to the < www.sec.gov
> and access the filings on Alaska Air Group, Inc. which will provide
access to all the filings including our preliminary proxy statement, the
version to be filed in early May 2003 should be within a few words of what will
be the definitive, hopefully we won't even have to change any words, commas,
etc. etc.
The Alaska Air Group, Inc. definitive proxy statement is there. It is displayed in two formats. www.secinfo.com is another place where you can go to see all these filings. Also, www.alaskaair.com clicking through to investor information will also show the filings.