Halliburton shareholder meeting agenda items

I notice that someone at Halliburton was burning the late-night oil surfing the web for information about the shareholder meeting:

I was up early this morning reading Halliburton's 2006 shareholder proxy statement to learn more about tomorrow's meeting. For your own copy, go to Halliburton's Investor Relations page and download the "2006 Proxy Statement - PDF Version" available there.

Here's the basic agenda of the meeting, as reported in the Notice of Annual Meeting:

The Annual Meeting of Stockholders of Halliburton Company, a Delaware corporation, will be held on Wednesday, May 17, 2006, at 9:00 a.m., local time, at the Simmons Center, 800 Chisholm Trail Parkway, Duncan, Oklahoma 73534. At the meeting, the stockholders will be asked to consider and act upon the matters discussed in the attached proxy statement as follows:

1. To elect eleven Directors to serve for the ensuing year and until their successors shall be elected and shall qualify.

2. To consider and act upon a proposal to amend Article FOURTH of Halliburton's Certificate of Incorporation, as amended, to increase the authorized common stock of Halliburton, par value $2.50 per share, from 1,000,000,000 shares to 2,000,000,000 shares.

3. To consider and act upon a proposal to approve the Board of Directors' policy on future severance agreements for executive officers of Halliburton.

4. To consider and act upon a proposal to ratify the appointment of KPMG LLP as independent accountants to examine the financial statements and books and records of Halliburton for the year 2006.

5. To consider and act upon three stockholder proposals, if properly presented at the meeting.

6. To transact any other business that properly comes before the meeting or any adjournment or adjournments of the meeting.

The items are presented in a slightly different order in the proxy statement, but I'll comment on them in the order listed above.

The first item, the election of eleven Directors of Halliburton's Board, is a 'done deal;' a plurality of shareholder votes elects each Director. So shareholders are merely rubber-stamping a decision already made. This expands the Board of Directors to eleven from nine.

In the second item, Halliburton shareholders are being asked to approve a 2:1 stock split approved by the Board in February. See Halliburton's Investor Relations FAQ page for a little more information [Question 9 currently]. Of course, the Board recommends a YES vote on this item.

In the third item, the Board proposes changing its policy regarding future severance packages with executive officers:

The Policy provides that we will not enter into a future employment agreement with severance provisions or a future severance agreement with an executive officer that provides ""Benefits'' ... that exceed 2.99 times the executive officer's annual base salary and bonus, unless such future agreement receives prior stockholder approval or ratification. ""Severance'' for purposes of the Policy means the termination of an executive officer's employment with Halliburton. The Policy is prospective only and it will not apply to existing agreements we have with our current executive officers.

I remember some criticism of Vice President Cheney's obscenely large severance package around town a few years ago; this must be a reaction to bad publicity generated by that absurd decision. But if it doesn't apply to current officers, it will take a long time to phase this policy in. How many golden parachutes have already been prepared for current executives?

The fourth item, the selection of an accountancy firm to audit the books, seems like a routine decision.

The fifth item, the three stockholder proposals, deserve a little more attention. The Board of Directors oppose all three.
The three proposals:

1. STOCKHOLDER PROPOSAL ON HUMAN RIGHTS REVIEW, proposed by CHRISTUS Health, the Benedictine Sisters of Mount St. Scholastica and The Catholic Funds
2. STOCKHOLDER PROPOSAL ON DIRECTOR ELECTION VOTE THRESHOLD, proposed by The United Brotherhood of Carpenters Pension Fund
3. STOCKHOLDER PROPOSAL ON POISON PILL, proposed by Lucian Bebchuk

The human rights proposal would require Halliburton to "base its human rights policies on the Universal Declaration of Human Rights, the International Labor Organization's Core Labor Standards and the United Nations Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, covering a range of rights, including the right to equal opportunity, security of persons, rights of workers and respect for economic, social and cultural rights." See http://www1.umn.edu/humanarts/links/commentary-Aug2003.html

The Board of Directors responds:

It is not our purpose as a commercial business enterprise to remake the world in the image of any particular political, legal, moral or religious philosophy with which we are comfortable. Rather, we hope to help improve the quality of life wherever we do business by serving as a developer of natural resources and infrastructures.

... Due to the long-term nature of our business and the inevitability of political and social change, it is neither prudent nor appropriate for Halliburton to establish its own country-by-country foreign policy regarding human rights.

We have long addressed many of the issues that fall under the umbrella of human rights, such as employment practices, nondiscrimination in employment, health and safety, and security of employees and company facilities.

Our support of these issues is clearly communicated in our Code of Business Conduct, which is available on our website at www.halliburton.com/policies/business conduct.jsp.

There is much more on this in the proxy statement; this could be the most interesting topic discussed at the meeting.

The second shareholder proposal suggests changing the election of Directors to the Board from a plurality of votes to a majority. This would give shareholders a bit more of a voice in the election of directors; the Board seems to like the current system: " While the Board is aware that the majority vote standard for election of directors is the subject of much interest and debate, we believe that it is premature for Halliburton to adopt a majority vote standard at this time." The same proposal was defeated last year.

The third shareholder proposal, the Poison Pill provision, would attempt to make hostile takeovers more difficult by making them more costly; I can't pretend to understand the arguments for or against this proposal.

The sixth item above, the "any other business that properly comes before the meeting" is not as open as it sounds. Business that "properly" comes up has to meet this standard:

Under our By-laws, no business may be brought before an Annual Meeting unless it is specified in the notice of the Meeting or is otherwise brought before the Meeting by or at the direction of the Board or by a stockholder entitled to vote who has delivered notice to Halliburton (containing the information specified in the By-laws) not less than ninety (90) days prior to the first anniversary of the preceding year's Annual Meeting. These requirements are separate from and in addition to the SEC's requirements that a stockholder must meet in order to have a stockholder proposal included in Halliburton's proxy statement. This advance notice requirement does not preclude discussion by any stockholder of any business properly brought before the Annual Meeting in accordance with these procedures.

So "protest stockholders" need to plan well ahead if they want an item discussed and voted on.

Some nuts and bolts about the meeting itself:

Attendance at the meeting is limited to stockholders and one guest each. Admission will be on a first-come, first-served basis. Registration will begin at 8:00 a.m., and the meeting will begin at 9:00 a.m. Each stockholder holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Please note that you may be asked to present valid picture identification, such as a driver's license or passport.

Also note: "No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Meeting."

Tomorrow will be interesting; I know I wouldn't have paid any attention to this meeting if it had occured in Houston.

The enemies are within, My child. Over the years you have given hiding places for them. They are permitted to plague you until your repentance is complete. Complete repentance means a final and absolute turning from the sin-filled fantasies and thoughts you have indulged. A holy hatred of the Babylonish garment is required.

As long as the harassing fears and foreboding come, fight against them with the weapons I have provided--believing prayer and grateful praise. They cannot prevail against these, and their attacks will turn to blessing.
--Hal Helms, Echoes of Eternity: Listening to the Father, 1996.