How to become a more active shareholder

Being a shareholder, or partial owner, of a corporation gives you the following rights that can help you to bring about change within the company:

Voting by proxy. The Securities and Exchange Commission (SEC) mandates that corporations send shareholders a proxy statement and ballot each year. Ballot questions often deal with the company's board of directors, auditors, option plan, as well as social issues. The proxy ballot authorizes management to cast your votes at the shareholder's annual meeting.

Initiating dialogue. Sending a letter to the company president or investor-relation department as a shareholder will most likely get a response.

Sponsoring resolutions. A shareholder-resolution sponsor must own at least $2,000 or 1 percent of the company's stock for at least a year. The proposal and supporting statement must be no more than 500 words. Check with the company to find out the due date for new resolutions. Proposals usually must be sent to the company before the end of the year, since most shareholder meetings are in the spring. It also must pass the SEC's grounds for exclusion (i.e. the proposal can't suggest breaking the law).

Divesting. While one individual selling stock is unlikely to affect a company, this practice can have a major impact if carried out by institutional investors, such as pension and mutual funds.

Internet message boards are especially helpful in connecting shareholders or people knowledgeable about a given company. Good sites to find these boards include Yahoo.Message.com, RagingBull.com, MotleyFool.com, StockJungle.com, and eRaider.com.

With the exception of the eRaider, however, these sites shy away from activism because of possible legal repercussions. Only eRaider.com has the SEC's official approval for activism.

TheCorporateLibrary.com and SocialFunds.org are also excellent sites for detailed information on shareholder activism.

But before you participate on a message board, here are some tips from Aaron Brown, cofounder of eRaider.com:

* Don't mention your credentials, or believe what you read based on the credential of someone else, because you don't know if it's valid.

* Don't use the biggest message boards. In almost every company, serious shareholders gather on more obscure boards so casual Web surfers can't clog them.

* Good boards will have the same people posting regularly for several months.

* Fraudulent messages often have many misspellings. "I'm amazed at how many 'dubble your money in three months' messages there are," says Mr. Brown.

(c) Copyright 2000. The Christian Science Publishing Society