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John Gilbert, 88; Fought for Small Shareholders

July 22, 2002|DENNIS McLELLAN | TIMES STAFF WRITER

He was known as a professional corporate gadfly, but John J. Gilbert preferred to call himself the "Prince of Proxies."

Gilbert, a New York investor who died July 15 at his daughter's home in Denver at age 88, spent more than 60 years fighting, along with his older brother, Lewis, for the rights of small shareholders.

The brothers, who at one time owned shares in about 1,500 companies, at their peak attended as many as 150 annual corporate meetings a year.

They fought for complete disclosure of company operations and for cumulative voting, which allows investors to cast all of their votes for a single director, thus increasing the chance of minority shareholders to name board representatives.

They demanded that annual meetings be held in convenient locations, that there be ceilings on executive compensation and limits on stock options.

They also insisted that independent corporate auditors be elected by stockholders, not appointed by management.

And they weren't shy.

John Gilbert, in particular, brought a sense of a showmanship to corporate meetings.

He wore a red clown's nose to an annual shareholder meeting of Mattel in the '70s after the toy company acquired Ringling Bros. and Barnum & Bailey Circus, and then passed noses out at other stockholder meetings.

After being kicked out of a Chock Full o' Nuts annual meeting one year, he returned the next year with a pair of boxing gloves strung around his neck.

"His line was, hit them hard and leave them laughing," said Margot Gilbert Frank, Gilbert's only child.

Not that Gilbert needed attention-getting props to get his points across, although he sometimes had to fight to be heard.

He wrestled a contender for a microphone at one annual meeting. And after his questions turned to shouts at a 1965 annual meeting of Desilu Productions, he was ordered to leave the auditorium.

During his struggle with a security guard to keep from being ejected, Gilbert lost his glasses, and the two men scuffled briefly in the aisle.

Desilu President Lucille Ball, according to a Los Angeles Times account, had "stared knives" at Gilbert throughout most of the meeting, saying at one point, "I've read about him. He's all what they say."

A decade ago, Business Week dubbed Gilbert "the grandfather of America's corporate gadflies." By his count, he had put forward more than 2,000 shareholder proposals in 50 years.

Gilbert was the bane of corporate executives, but a hero to small investors.

"In light of what's happening today in the accounting profession and with corporate reporting, John Gilbert was decades ahead of his time in wanting to make sure that corporate management reported results accurately," said Peter Firmin, director of development for the School of Accountancy in the Daniels College of Business at the University of Denver.

Firmin said Gilbert wanted to ensure that corporations "fully reported the results of activities to all shareholders, not only major shareholders, that they increased the depth and breadth of information included in annual reports. He wanted to make sure that boards of directors were as independent as possible and were not simply tools of management.

"In other words, he was calling for accuracy and full disclosure of accounting information long before it was popular to do so."

John Jacob Gilbert was born in Manhattan in 1914. His father had been part owner of a paper mill but had sold his share and lived off investments.

"I was born with a silver spoon and polished it," Gilbert liked to say. He went to private school, graduated from Patrick Business School in Manhattan and later lived off his investments.

The Gilbert brothers' campaign for corporate responsibility and shareholder rights began in 1932 when Lewis Gilbert attended an annual meeting and wasn't allowed to ask a question.

In 1946, the Gilberts challenged Transamerica Insurance Co. by seeking to add several resolutions to the company's proxy statement.

They asked that Transamerica move its annual meeting from Delaware, the state of incorporation, to California, where its operations were based. They also proposed that shareholders be able to approve or reject management's choice of auditors, and that minutes be provided to shareholders who could not attend the annual meeting.

"Prior to 1946 a company could legally refuse anybody's resolution in the proxy statement, so all you got if you were lucky was to vote for the directors," John Gilbert's daughter said.

As a result of the Transamerica case, she said, the Securities and Exchange Commission began requiring that all corporations include relevant shareholder resolutions in proxy statements.

Gilbert called the ruling "the Magna Carta" for small shareholders.

But that was just the beginning, said his daughter.

"Then they went fighting for independent auditors, which are now an accepted practice. The highlight is probably that they've gotten so many companies to pass cumulative voting."

Gilbert's brother, Lewis, died in 1993. Gilbert stopped attending annual meetings in 2000, after his wife of 53 years, Margaret, died.

A longtime resident of Manhattan, Gilbert became ill last fall while attending a reception honoring his endowment of a professorship in accounting at the University of Denver. Suffering from multiple myeloma, he remained in Denver with his daughter, who survives him along with three grandchildren and four great-grandchildren.

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