For Shareholders, Secrecy Stinks

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Corporate secrecy sucks. Having access to a wide variety of significant information makes a huge difference when assessing whether a stock's worth buying, holding, or selling. Unfortunately, many companies haven't realized that stingier disclosures cast their corporate governance in a lousy light.

Apple's rotten turn
's (Nasdaq: AAPL  ) secretive behavior may help the company keep its newest high-tech products under wraps, but in many other respects, its furtive ways do its shareholders no favors.

Last week, Apple shareholders voted down a shareholder proposal posed by the Central Laborers' Pension Fund that asked for a detailed succession plan in the event Steve Jobs can't return to the helm. Case closed, right? Not so fast.

The New York Times reported that Apple buried the actual vote tallies for the proposal in an SEC filing, noting that major companies such as Ford and Goldman Sachs disclose this information in a less opaque manner.

Perhaps the powers that be at Apple figured that it's easy to brush off a vote that only gained 30% of shareholders' support. However, it's a much bigger deal when you see that votes representing a not-insignificant 172 million Apple shares favored the proposal.

Although burying information in an SEC filing is technically disclosure, it's not exactly the most transparent way to distribute information to shareholders.

Slogging through the legalese
Disclosing pertinent information in SEC filings without including it in press releases or other, more accessible locations is nothing new. Years ago, while working for a newswire, I spent much of my working hours digging through SEC filings for significant information that companies hadn't otherwise disclosed. Some of the tidbits my colleagues and I unearthed were real doozies, triggering massive stock moves when the information hit the wires.

Today, the website strives to bring such information to light, since many companies persist in burying important information in dense legalese that many investors may not have the time or patience to dig through.

Recent interesting tidbits on's radar included an apparently random, unexplained raise for an ExxonMobil (NYSE: XOM  ) senior executive, juicy details on the generous payouts St. Joe's (NYSE: JOE  ) former CEO William Britton Greene has received, and the latter company's raiding of its own pension fund. Footnoted's team also pointed out that Progressive (NYSE: PGR  ) does related-party business with many of the companies of folks who serve on its board of directors, including Fiserv (Nasdaq: FISV  ) , Aetna (NYSE: AET  ) , and Marsh & McLennan (NYSE: MMC  ) .

Taking stock of secretiveness
Many companies probably wouldn't want anyone digging too deep into their filings in search of questionable deeds. But aside from competitive product information, the best companies should have nothing to hide. Shareholders should expect -- and demand -- disclosure through many different channels, not just the ones regulations require, and avoid companies that seek to sweep their dubious doings under a regulatory rug.

If information is power, too many companies seem to want their true owners to remain relatively powerless.

Check back at every Wednesday and Friday for Alyce Lomax's columns on corporate governance.

Apple and Ford Motor are Motley Fool Stock Advisor recommendations. The Fool has written puts on Apple. The Fool owns shares of Apple, ExxonMobil, Fiserv, and Ford Motor. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned; for more on this and other topics, check back at, or follow her on Twitter: @AlyceLomax.The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 02, 2011, at 4:10 PM, catoismymotor wrote:

    +1 Rec.

    For my amusement I would like to read about you barging into Goldman Sachs, JPMorganChase or Bank of America with a hatchet, Carrie Nation style, to bust open the files, shine light in the dark corners.

    Without full disclosure investing is reduced to true gambling.

  • Report this Comment On March 02, 2011, at 4:37 PM, TMFLomax wrote:

    I wish I could give a +1 Rec to your comment, Cato! Love it.


  • Report this Comment On March 02, 2011, at 9:53 PM, CMFStan8331 wrote:

    Thanks for everything you're doing to bring this issue to the forefront, Alyce. It's amazing to me that in the wake of such a historic financial crisis, so many folks still seem completely oblivious to the dangers of poor transparency, weak corporate governance and job-hopping CEO's.

    Cato is right - without full disclosure, investing takes on the nature of a casino (with the exception that in a casino, management is likely to be more forthcoming about the odds!)

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