Sunday, May 22, 2005
VIA: Fax (732) 928-3136 and email to firstname.lastname@example.org to Mr. Hagberg; email splefka@Equiserve.com to Mr. Plefka
Dear Mr. Hagberg and Mr. Plefka:
As Inspector of Elections and Proxy Tabulator at the May 17, 2005 Alaska Air Group, Inc. ("AAG") annual shareholder meeting, and as you prepare to certify this vote, we would like to call to your attention the following matter:
The AAG ERISA 401(k) plan participants, who share in ownership of approximately 1.5 million shares in the trust, were not properly notified by the AAG or its agents of their right to learn about the 2005 AAG CHALLENGER opposing solicitation. Additionally, the plan participants were not properly instructed about how to legally vote for six additional AAG board candidates and three additional shareholder proposals appearing only in the CHALLENGER's proxy statement.
This contested election was acknowledged by the AAG in its proxy statement and federal securities regulators, who issued the go-ahead for the CHALLENGERS to file a Definitive Proxy Statement with the SEC, which was accomplished on April 29, 2005. These events satisfied requirements in NYSE rule 402. According to the AAG 401(k) Trust Agreements, these facts assured the right of the AAG 401(k) plan participants to vote for all CHALLENGER candidates and proposals.
Because the CHALLENGERS conducted an SEC-approved Internet solicitation, and the AAG refused to publish contact information in the company's proxy materials as to the location of the solicitation on the Internet at www.votepal.com/, we believe it was the fiduciary duty of the company, and each and all of its agents, to notify ALL plan participants via an alternative method of the information regarding this solicitation and how plan participants could vote the CHALLENGER's proxy--i.e "Full Disclosure".
Vanguard sent a letter to EquiServe (copy attached) that was to be mailed to AAG plan participants. But for some unknown reason it did not go out in all packets of the mailed materials. (I did not receive one and had to contact Vanguard, who then instructed EquiServe to mail me a copy). I have talked to numerous AAG plan participants who did not receive the letter in their mailed proxy materials. Additionally, as far as I know, not one AAG plan participant who had chosen to receive their materials electronically received the Vanguard instruction letter. (We can provide sworn affidavits from a sampling of workers if you require).
This means that thousands of AAG 401(k) stockholders who owned the bulk of the 1.5 million shares in the 401(k) trusts were disenfranchised--which could affect the outcome of the vote totals in this election.
If this five percent of the stock does indeed affect the passage or failure of any stockholder proposal or CHALLENGER candidate, we plan to object to the U.S. Dept. of Labor Employee Benefits Security Administration (EBSA), the U.S. Dept. of Justice, U.S. SEC, state of Delaware SEC, and other such state Justice Departments as may be required.
We assert that the fiduciary duty to fully inform the plan participants shareholders is not open to interpretation. ERISA makes it absolutely clear, no party--not the company, not any agent of the company, not any broker, not Vanguard, not EquiServe, not the NYSE, not ADP, not the state of Delaware, not even the U. S. SEC--are permitted to compromise or edit the "Full Disclosure" of all the facts surrounding the exercise of the ownership and voting rights of 401(k) plan participant shareholders.
While it may be argued that some of these entities permit or provide exception mechanisms to "Full Disclosure" to some shareholders, or may appear to permit the shifting of the responsibility for some portion of disclosure to the CHALLENGERS, such arguments are irrelevant.
The standard is ERISA, and it places the entire duty for "Full Disclosure" on the company and every agent of the company to perform, and to insure without exception, the providing to EVERY plan participant shareholder a "Full, Fair, Clear, Balanced and Unbiased Disclosure" (See Carter Hawley Hale 1985 at http://www.ragm.com/books/corp_gov/cases/cs_chh.html/).
In this post-Enron world, we doubt there would be much patience for such a failure of responsibility. We assert that it appears that the company failed, or failed to require its agents, to fulfill the full measure of this duty. If this turns out to be the fact, then we doubt any count of the shareholder voting could be certified.
Voting is a sacred right of our democratic republic--including proxy voting. Any advantage thought to be attainable by subtle or direct manipulation, or gaming of a voting system, is fraught with danger to the reputational-component of those who would permit, order, encourage or turn a blind eye to such efforts.
We look forward to the resolution of the results of the AAG stockholder voting that you will tabulate. Please communicate to me via fax or email as soon as you publish. Thank you.
15204 NE 181st Loop
Brush Prairie, WA 98606
email@example.com || fax: (360) 666-6483 || home: (360) 687-3187
cc: The 2005 AAG CHALLENGERS and Shareholder Proposalists
AAG, Inc. Board of Directors
SEC Enforcement Division
US Dept. of Justice
Dept. of Labor Employee Benefits Security Administration
State of Delaware SEC