Bitter fight over Prop. 211
Silicon Valley is deeply embroiled in the fight over a California shareholder ballot initiative that has high-tech firms threatening to boycott the state and politicians scrambling to escape the fallout.
Proponents say Proposition 211 will make shareholder lawsuits easier to lob at companies, especially high-tech firms, when earnings fall short of expectations or stock prices take a tumble. High-tech companies lobbied heavily against the proposition, even convincing President Clinton and Republican presidential challenger Bob Dole to come out in opposition to the proposition.
The battle heated up today as state Senator Bill Lockyer, a high-tech trade association, and a Silicon Valley nonprofit group all jumped into action with a flurry of press releases.
Senator Lockyer (D-Hayward) recently reiterated his opposition to the ballot measure before a group of industry executives hosted by the Semiconductor Equipment and Materials International organization. Lockyer said he fears that the initiative, if passed, would expose semiconductor companies and other high-tech firms to a flood of frivolous lawsuits.
Technology companies are as concerned, if not more, than Lockyer. The American Electronics Association released a survey today that found 47 percent of its 239 members surveyed said their companies would move out of California if the proposition passes in November. That would mean the loss of 61,000 jobs in California, according to Chris Ullman, an AEA spokesman.
He also noted that 98 percent of the companies surveyed said they would find it more difficult to recruit top executives and directors should the initiative pass.
"Prop. 211 won't let companies indemnify their officers and directors in shareholder lawsuits, which they are allowed to do now," Ullman said. "This would make them and their families personally liable and could create a huge brain drain on talent."
Supporters of 211 contest the findings of the survey. "To say you'd consider leaving doesn't mean you'd actually leave," said Sean Crowley, spokesman for Citizens for Retirement Protection and Security. "Their numbers are ridiculously high."
The rhetoric is only going to get hotter closer to Election Day. T.J. Rogers, Chief Executive of Cypress Semiconductors, is slated to chair a panel debate later this month about the initiative hosted by the nonprofit Churchill Club in Palo Alto, California. Rogers recently lambasted the initiative in a Wall Street Journal opinion piece and will face off against representatives from organizations supporting the initiative.