Filed in archive shareholder activism by leon on November 19, 2007

When I attend annual meetings, I am often struck that no-one asks hard questions. The kind that make the CEO and directors squirm.

PricewaterhouseCoopers has put out a list of questions to ask at shareholder meetings. And it makes great reading.

Consider these for example:

What actions is the company taking to make its annual report more transparent to investors?

Have the company's corporate governance structure and processes been subject to comments and observations by outside parties, like Institutional Shareholder Services, Inc.?

What is the company's corporate governance rating issued by outside parties, like Institutional Shareholder Services, Inc.? What is being done to improve the rating?

Do directors formally evaluate their own performance on a regular basis-individually and as a board? What factors are considered in the evaluation? Is the evaluation process linked to the company's future strategic needs, rather than solely to past performance? What is done with recommendations coming from the evaluation?

Do the company's code of conduct and conflict-of-interest policies for officers and employees also cover outside directors? Were any waivers granted to executive officers or directors? Are there any communications or other evidence that would indicate that executive officers or directors have conflicts of interest?

Are any of the company's outside attorneys also officers, directors, or shareholders of the company? Who reviews the fees paid to their firms? Who determines what work will be given to their firms?

Does the board challenge management's decisions? What examples can you give to demonstrate that directors are sufficiently independent and strong to overrule management when necessary?

What is the company's policy on loans to non officer employees? What is the total dollar amount of these loans? What were the loans for? Are interest rates on these loans at market rates?

Has the company forgiven or restructured loans in light of subsequent declines in the company's stock price? Has the company forgiven any loans to management or directors?

How do the perquisites (e.g., use of company aircraft, automobiles, apartments, executive retreats or other company facilities, or benefits for executives' families) the company has disclosed under the new SEC executive compensation disclosures compare with other companies in the industry? How are personal benefits valued? Do executives reimburse the company for the fair value of personal benefits received, or does the company gross up the value of the benefits for the tax consequences to the executives (i.e., the company pays the taxes as well)? Are executive perquisites reviewed by the internal auditors and reported to the audit committee (compensation committee)?

There are 59 pages of great curveball questions. Everyone attending meetings should read through this and come prepared.