May 17, 2005
MCI Shareholders Speak
Posted by Christine Hurt

At the MCI annual shareholder's meeting yesterday, shareholders representing 28% of the shares voted withheld their votes for the directors up for re-election.  As Prof. Ribstein asked earlier, what more can shareholders do?  Without an alternate slate of directors or an alternate merger proposal, all shareholders can do is withhold votes and try to convince other shareholders that they don't know to do the same.  Even with Roy Disney and Stanley Gold spending money out the wazoo, they were only able to convince a slightly higher percentage of shareholders to withhold votes last year at the Disney annual meeting.

Shareholder disapproval by withholding votes only sends a message to the board if the directors believe that (1) disapproval would grow and they might not be re-elected next time (unlikely) or (2) the disapproval will result in a price decline.  Of course here, the MCI directors are in the quintessential final period and have agreed to receive a certain price for their shares from Verizon.  So, the withholding of votes may prove to be an effete gesture.

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