Yahoo! shareholders have made two very interesting proposals that will be voted on during the annual shareholder meeting next week (June 12, 2007).
First, the City of New York Retirement System proposed that Yahoo! set six minimum standards to help protect freedom of access to the Internet. The proposal is directly aimed at Yahoo! China, a subsidiary of Yahoo!, Inc., for providing contact information for journalists and other pro-democracy activists to the Chinese government which subsequently imprisoned those activists. The minimum standards are:
Second, someone with a small number of shares (200) has proposed that Yahoo! set up a board committee for Human Rights.
Truth is, businesses should not have offices or subsidiaries in a country if the return also comes with assisting a dictatorship or other authoritarian regime to inhumanely treat its people. I’m sad in general that any company would be stuck in this quandary. And I’m sad that we, as a country, have transfered a great deal of our manufacturing and labor intensive tasks to countries with such authoritarian governments and have almost all turned a blind eye to what we’re doing in the name of progress and economic benefits (it provides neither in the long run).
In the end, I think we as shareholders need to be responsible for the actions of companies we own. And this message goes to shareholders of Cisco (creator of the Great Firewall of China), Google (censoring search results for China), and a host of companies doing business in China and other countries to skirt more stringent environmental regulations in the US and EU.
I have a very small number of shares of Yahoo! that I acquired while working there and will vote for both although I don’t think my vote counts for much more than my symbolic expression, and I don’t expect either to pass.
*note: I’m still a fan of Yahoo! and a user of its products. I just happen to disagree with some of the business decisions made – business decisions any other company would have a hard time not making an identical choice. A little constructive criticism never hurt anyone, unless you live in a country that outlaws it.
PROPOSAL NO. 6
STOCKHOLDER PROPOSAL
The City of New York Office of the Comptroller, 1 Centre Street, New York, NY 10007-2341, has notified the
Company that it intends to present the following resolution at the annual meeting, as custodian and trustee of the New York City Employeesâ?? Retirement System, beneficial owners of 1,587,718 shares of common stock of the Company, The New York City Teachersâ?? Retirement System, beneficial owners of 1,164,585 shares of common stock of the Company, the New York City Police Pension Fund, beneficial owners of 628,874 shares of common stock of the Company, the New York City Fire Department Pension Fund, beneficial owners of 187,208 shares of common stock of the Company, and as custodian of the New York City Board of Education Retirement System, beneficial owners of 110,387 shares of common stock of the Company. The proposal and the proponentâ??s supporting statement appear below in italics.
The board of directors of Yahoo! strongly opposes adoption of the proposal and asks stockholders to review the Boardâ??s response, which follows the proposal and its accompanying recitals.
The affirmative vote of the holders of a majority of the shares of common stock present, in person or
represented by proxy, and entitled to vote on the proposal is required to approve this proposal.
Our Board of Directors recommends that you vote â??AGAINSTâ? the stockholder proposal.
Stockholder Proposal
INTERNET CENSORSHIP
Whereas, Freedom of speech and freedom of the press are fundamental human rights, and free use of the
Internet is protected in Article 19 of the Universal Declaration of Human Rights, which guarantees freedom to â??receive and impart information and ideas through any media regardless of frontiersâ?, and
Whereas, the rapid provision of full and uncensored information through the Internet has become a major
industry in the United States, and one of its major exports, and
Whereas, political censorship of the Internet degrades the quality of that service and ultimately threatens the integrity and viability of the industry itself, both in the United States and abroad, and
Whereas, some authoritarian foreign governments such as the Governments of Belarus, Burma, China, Cuba,
Egypt, Iran, North Korea, Saudi Arabia, Syria, Tunisia, Turkmenistan, Uzbekistan, and Vietnam block, restrict, and monitor the information their citizens attempt to obtain, and
Whereas, technology companies in the United States such as Yahoo, that operate in countries controlled by
authoritarian governments have an obligation to comply with the principles of the United Nations Declaration of Human Rights, and
Whereas, technology companies in the United States have failed to develop adequate standards by which they can conduct business with authoritarian governments while protecting human rights to freedom of speech and freedom of expression,
Therefore, be it resolved, that shareholders request that management institute policies to help protect freedom of access to the Internet which would include the following minimum standards:
1) Data that can identify individual users should not be hosted in Internet restricting countries, where
political speech can be treated as a crime by the legal system.
2) The company will not engage in pro-active censorship.
3) The company will use all legal means to resist demands for censorship. The company will only comply with
such demands if required to do so through legally binding procedures.
4) Users will be clearly informed when the company has acceded to legally binding government requests to
filter or otherwise censor content that the user is trying to access.
5) Users should be informed about the companyâ??s data retention practices, and the ways in which their data is shared with third parties.
6) The company will document all cases where legally-binding censorship requests have been complied with,
and that information will be publicly available.
Board of Directors Statement AGAINST Stockholder Proposal
Yahoo! is committed to preserving and advancing the fundamental principles of free speech and expression,
and as described in detail below, has already adopted policies to promote open access to information and
communication for users of the Companyâ??s services around the world. The board of directors believes the
Companyâ??s existing policies, which were carefully developed by Yahoo!â??s management team, provide the Company with the flexibility and resources to comply with applicable laws and, at the same time, protect and advance these important freedoms. By contrast, Yahoo! believes certain of the standards suggested by the proponent would give the Company insufficient flexibility in responding to applicable legal requirements. Accordingly, while Yahoo! shares many of the proponentâ??s concerns and objectives, the board of directors believes, in light of the policies, practices and initiatives already in place at the Company, the proponentâ??s suggestions are both unnecessary and counter to the best interests of the Company and its users, and therefore urges stockholders to vote â??AGAINSTâ? the proposal.
Yahoo! is deeply concerned by efforts of some governments to restrict communication and control access to
information. Yahoo! also firmly believes the continued presence and engagement of companies like Yahoo! in these markets is a powerful force in promoting openness and reform. Yahoo! understands its responsibility to remain engaged on these issues on a global basis; however, Yahoo! believes private industry alone cannot effectively influence foreign government policies on issues like the free exchange of ideas and open access to information.
Because state actors have the most leverage in this field, Yahoo! believes continued government-to-government dialogue in bilateral and multilateral forums is vital to achieve progress on these complex political and human rights issues.
As part of the Companyâ??s ongoing commitment to preserving the open availability of the Internet around the
world, Yahoo! announced in February 2006 it was undertaking the following actions:
â?¢ Collective Action: Yahoo! will work with industry, government, academia and non-governmental organizations
to explore policies to guide industry practices in countries where content is treated more restrictively
than in the United States and to promote the principles of freedom of speech and expression.
â?¢ Compliance Practices: Yahoo! will continue to employ rigorous procedural protections under applicable
laws in response to government requests for information, maintaining its commitment to user privacy and
compliance with the law.
â?¢ Information Restrictions: Where a government requests that Yahoo! restrict search results, Yahoo! will do
so if required by applicable law and only in a way that impacts the results as narrowly as possible. If Yahoo!
is required to restrict search results, it will strive to achieve maximum transparency to the user.
â?¢ Government Engagement: Yahoo! will actively engage in ongoing policy dialogue with governments with
respect to the nature of the Internet and the free flow of information.
Since this announcement, the Company has also established a multi-disciplinary and cross-functional team of
Yahoo! employees worldwide to coordinate and support the Companyâ??s efforts to address privacy and free
expression issues on a global basis. The team consists of Yahoo! employees from a variety of disciplines and
departments, including legal, public and governmental relations, privacy, public policy, community affairs, global law enforcement and compliance, security, emerging markets and international operations. Members of the team consult regularly with Company officers and other personnel and respond to internal and external requests for information and feedback on foreign laws and Company practices and policies. Members of the team also consult with governmental agencies, such as the U.S. Department of State, and various outside professionals in the field, including experts at various academic institutions. Members of the team also collaborate with leaders and representatives of other technology and communications companies to seek solutions to free expression and privacy challenges these companies face when conducting business internationally.
To further advance thinking and practices around the promotion of free expression and privacy, Yahoo! is
actively engaged in a formal dialogue, co-facilitated by Business for Social Responsibility and the Center for
Democracy & Technology, that includes industry counterparts, various human rights groups, academic institutions and socially responsible investors. This diverse group aims to produce a set of global principles and operating procedures on freedom of expression and privacy to guide company behavior when faced with laws, regulations and policies that interfere with human rights. The groupâ??s goals also include creating an implementation, accountability and governance framework, as well as a forum for sharing ideas.
The policies, practices and initiatives described above have been developed by Yahoo! management based on
its thorough and careful consideration of the inherent complexities associated with operating under the laws of multiple foreign countries. These complicated issues require a detailed understanding of the Companyâ??s business (which is highly competitive and characterized by rapid change), user base and technologies, as well as an ability to conform to the various legal and regulatory systems of the countries in which the Company maintains operations.
Yahoo! believes that it would be imprudent for the Company to be constrained by a set of specific, static and highly prescriptive standards and policies that may not be workable and effective across countries and business lines.
Instead, Yahoo!, its stockholders and its users are better served by more generalized policies that fully reflect the
Companyâ??s commitment to the principles of free speech and user privacy and still afford the Company enough flexibility to design and implement procedures that comply with the various legal systems under which the Company chooses to operate.
Yahoo! also believes its existing policies appropriately recognize the different roles private industry and
governments play with respect to the nature of the Internet and the flow of information, and that such policies properly allocate to the Company responsibility for working and maintaining a dialogue with governments, members of academia and other industry participants for the purpose of advancing and protecting these fundamental principles. The Company believes its existing policies, practices and initiatives, as described in more detail above, strike an appropriate balance in furthering these important objectives and will effectively position the Company to serve as a continued force in promoting openness and reform.
Recommendation of the Board of Directors
FOR ALL OF THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE
PROPOSAL NO. 7
STOCKHOLDER PROPOSAL
Mr. John C. Harrington, 1001 2nd Street, Suite 325, Napa, CA, who owns 200 shares of the Companyâ??s
common stock, has given notice of his intention to present a proposal at the annual meeting. The proposal and the proponentâ??s supporting statement appear below in italics.
The board of directors of Yahoo! strongly opposes adoption of the proposal and asks stockholders to review the Boardâ??s response, which follows the proposal and the proponentâ??s supporting statement.
The affirmative vote of the holders of a majority of the shares of common stock present, in person or
represented by proxy, and entitled to vote on the proposal is required to approve this proposal.
Our Board of Directors recommends that you vote â??AGAINSTâ? the stockholder proposal.
Stockholder Proposal Amendment to Corporate Bylaws Establishing Board Committee on Human Rights
RESOLVED: To amend the corporate bylaws, by inserting the following new Article 4.4:
Article 4.4
Board Committee on Human Rights
a. There is established a Board Committee on Human Rights, which is created and authorized to review the
implications of company policies, above and beyond matters of legal compliance, for the human rights of
individuals in the US and worldwide.
b. The Board of Directors is authorized in its discretion consistent with these Bylaws and applicable law to
(1) select the members of the Board Committee on Human Rights, (2) provide said committee with funds for
operating expenses, (3) adopt regulations or guidelines to govern said Committeeâ??s operations, (4) empower said Committee to solicit public input and to issue periodic reports to shareholders and the public, at reasonable expense and excluding confidential information, on the Committeeâ??s activities, findings and recommendations, and (5) adopt any other measures within the Boardâ??s discretion consistent with these Bylaws and applicable law.
c. Nothing herein shall restrict the power of the Board of Directors to manage the business and affairs of the
company. The Board Committee on Human Rights shall not incur any costs to the company except as authorized by
the Board of Directors.
Supporting Statement
The proposed Bylaw would establish a Board Committee on Human Rights which would review and make
policy recommendations regarding human rights issues raised by the companyâ??s activities and policies. For
example, Yahoo reportedly disclosed the identity of a Chinese citizen who had published information critical of the Chinese government on the internet; as a result of Yahooâ??s disclosure, the individual is serving a 10 year jail sentence. Also, of the major internet search engines operating in China, Yahoo censored more terms, according to a limited test conducted by Reporters Without Borders. We believe the proposed Board Committee on Human Rights could be an effective mechanism for addressing the human rights implications of the companyâ??s activities and policies on issues such as these, as they emerge anywhere in the world. In defining â??human rights,â? proponents suggest that the committee could use the US Bill of Rights and the Universal Declaration of Human Rights as nonbinding benchmarks or reference documents.
Board of Directors Statement and Recommendation AGAINST Stockholder Proposal Yahoo! shares the proponentâ??s commitment to human rights, and as described in more detail in the boardâ??s statement in opposition to proposal no. 6 in this proxy statement, the Companyâ??s management team has already instituted practices and initiatives that are designed to assess the implications of the Companyâ??s activities and policies and to protect and advance essential freedoms, such as freedom of expression and privacy rights.
To further advance thinking and practices around the promotion of free expression and privacy, Yahoo! is
actively engaged in a formal dialogue, co-facilitated by Business for Social Responsibility and the Center for
Democracy & Technology, that includes industry counterparts, various human rights groups, academic institutions and socially responsible investors. This diverse group aims to produce a set of global principles and operating procedures on freedom of expression and privacy to guide company behavior when faced with laws, regulations and policies that interfere with human rights. The groupâ??s goals also include creating an implementation, accountability and governance framework, as well as a forum for sharing ideas.
These practices and initiatives have been developed by Yahoo! management based on its thorough and careful consideration of the inherent complexities associated with operating under the laws of multiple foreign countries.
The board of directors believes that Yahoo!â??s management team, with its day-to-day involvement in the Companyâ??s business operations and its detailed understanding of the legislative and regulatory landscape of the countries in which the Company operates, is in the best position to assess these matters and to make informed judgments as to what practices and policies are most likely to promote the interests of the Company and its stockholders and users.
Recommendation of the Board of Directors
FOR ALL OF THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE â??AGAINSTâ? THIS PROPOSAL. PROXIES RECEIVED BY THE
COMPANY WILL BE VOTED â??AGAINSTâ? THIS PROPOSAL UNLESS THE STOCKHOLDER SPECIFIES
OTHERWISE IN THE PROXY.
