Substantial implementation, that’s the deception companies have been arguing in order to obtain ‘no-action’ relief under SEC Rule 14a-8(i)(10) after implementing proxy access ‘lite.’ Law firms have been touting recent no-action letters released on February 12, with more in March 2016. It looks like a clear win for entrenched managers and directors for implementing only proxy access lite. In reality, such deception will cost companies more in legal fees and will reduce board discretion, since shareholders will increasingly file binding bylaw resolutions to obtain the same robust proxy access promised under vacated Rule 14a-8(i)(10). Continue Reading →
Tag Archives | CII
Today is your last chance to vote for real proxy access at Whole Foods Market Inc. (WFM, $WFM), unless you plan to attend the meeting in San Francisco tomorrow. The annual shareholder’s meeting will be held at the Fairmont Hotel, 950 Mason Street, San Francisco, California 94108 and will begin at 8 a.m. See Pension funds line up in favor of proxy-access bylaw change at Whole Foods.
If you do attend, please stop me and say hello. I would love to get your feedback on how shareholders can improve accountability through improved corporate governance. Whole Foods used to be one of the largest holdings in my portfolio. Back in October 2013 shares sold for about $65; today $35 seems to be the threshold to beat.
I used to head California’s cooperative development program, so had a lot of experience with struggling grocers and their co-op wholesale. I invested in Whole Foods Market because their model was something of a hybrid, with its emphasis on teams, employee ownership and organic foods. Let’s discuss how Whole Foods can get its groove back.
Apple shareholders rejected real proxy access at their meeting on February 25, 2016. Maybe shareholders thought they already have it. Recent decisions by the SEC could lead shareholders to believe proxy access was “substantially implemented.”
Maybe they wanted to support Apple’s management while the company is under attack from the FBI.
ISS recommended a “For” vote. Shouldn’t that have guaranteed passage?
We probably won’t know for months which Apple shareholders rejected real proxy access… and maybe that’s the key point.
As reported by the Wall Street Journal (Apple Offers Proxy Access) and the Financial Times (Campaigners hail Apple shareholder move), Apple adopts proxy access. Yes, that’s progress, but we shouldn’t be gushing in praise over proxy access lite.
Scott Stringer, New York City comptroller, called the Apple decision a
tipping point… Corporate resistance to proxy access is crumbling as more and more boards are coming to the table and working with investors to provide greater accountability that will drive long-term value.
This was an interesting session from the Council of Institutional Investors Fall 2015 Conference in Boston. Please feel free to post corrections, counterpoints and additional relevant material on topic of Investing for the Long-Term, using the site’s comment feature. Find more posts from the conference on this site or Twitter by searching #CIIFall2015.
Investing for the Long-Term
Mark Grier, Vice Chairman, Prudential Financial
Ronald O’Hanley, President & CEO, State Street Global Advisors
Moderator: Theresa Whitmarsh, Executive Director, Washington State Investment Board Continue Reading →
This the fifth part of my coverage of this year’s ICGN event in Boston. I haven’t taken the time to edit the prose to make complete well-flowing sentences. Still, I hope you find them of some value. Here we touch on the idea of a Stewardship code for the US and I captured a few remarks from DuPont’s former CEO, Ellen Pullman. Continue Reading →
ISS’s 2015-2016 global voting policy survey indicate investors are prepared to vote against directors at companies that ignore shareholders wishes and adopt proxy access mechanisms with overly burdensome ownership requirements.
An overwhelming majority of investors said ISS should issue negative director recommendations if a shareholder proposal to provide proxy access receives majority support and a board adopts proxy access with material restrictions not contained in the shareholder proposal. 90% said an against or withhold vote in a director election would be warranted if a provision had an ownership threshold in excess of 5% or an ownership duration in excess of three years. From the ISS press release: Continue Reading →
I attended day one of the ICGN Boston Event and CII 2015 fall conference at the Westin Copley Plaza in Boston, MA. I will do at least a post or two on this wonderful combined meeting in future. However, I’m also negotiating with a couple of companies on proxy access and will be taking a much needed vacation out of country with my wife, who just retired. Therefore, my posts will not be forthcoming for a while. Continue Reading →
Last week I uploaded a revised template for proxy access proposals (see Avoiding Proxy Access Lite: QUALCOMM Proposal) to address some of the problems identified by the Council of Institutional Investors in their August 5th report, Proxy Access: Best Practices. Thanks to the quick response from several readers, I have already made a few improvments. Please use the new language below if you want to keep up with my latest revised template. Of course, I always welcome additional suggestions for improvement from readers either through the comment function below or by email. I hope to see many of you at the ICGN/CII conference in Boston today. Continue Reading →
As I have mentioned in other posts (see especially Proxy Access Lite: Victories at Whole Foods, H&R Block), several companies have adopted proxy access ‘lite’ with provisions that make implementation excessively difficult and less effective than they would have been under the SEC’s universal proxy access Rule 14a-11.
Although I withdrew proposals at several companies, based on the fact that even adoption of proxy access lite represented real progress, I vowed to circle back and seek more robust provisions through subsequent amendments. I recently filed the first such proposal at Whole Foods Market. Let’s start fixing proxy access lite. Continue Reading →
As I have mentioned in several other posts (see especially Proxy Access Lite: Victories at Whole Foods, H&R Block), several companies have adopted proxy access ‘lite’ with provisions that make implementation excessively difficult and less effective than anticipated by the SEC’s vacated Rule 14a-11. At the beginning of last season I announced that proxy access was temporarily ‘on sale.’ I was willing to accept some unfavorable provisions in order to establish a track record of ‘wins.’
That mission has largely been accomplished. Proxy access was the hottest topic this year and is fully expected to be so for the next few seasons. Boards now see proxy access as inevitable and are adopting bylaws even without receiving shareholder proposals. Philip Morris is one of the latest. As the next season gears up, it is time to reframe proposals, avoiding proxy access lite from the start.
Fortunately, the Council of Institutional Investors, released an excellent policy paper on August 5, 2015, Proxy Access: Best Practices, which “highlights the most troublesome provisions” of recently adopted bylaw and charter amendments. I used that as a guide to reconstruct last year’s template proposal and have begun submitting this new template to companies that have not adopted proxy access provisions. QUALCOMM (QCOM) is one of the first examples. We only get 500 words for a shareholder’s proposal. Hopefully, this new version addresses most of the previous defects. Continue Reading →
In response to a proxy access proposal I filed earlier this year, Clorox Co (NYSE:CLX), manufacturer and marketer of consumer and professional products, adopted proxy access (press release, amended bylaws). I am declaring another victory and withdrawing my proposal.
While I filed a standard proxy access proposal seeking the ability of shareholders with 3% of shares held for 3 years to be able to nominate up to 25% of the board, Clorox adopted bylaws allowing nominations only up to 20% and limiting nominating groups to 20, whereas my proposals had no such restrictions on the number of participants in nominating groups. Continue Reading →
As you may have read by now Microsoft Makes It Easier for Shareholders to Nominate Candidates to Board, another company where we filed for proxy access has adopted proxy access lite.
We were glad to play a role in negotiating the change on behalf of shareholders and withdrew our proxy access proposal contingent on the Board’s adoption of specified terms. Continue Reading →
In response to proxy access proposals filed this year, both Whole Foods Market (WFM) and H&R Block (HRB) have adopted proxy access. While I had filed standard proposals seeking the ability of shareholders with 3% of shares held for 3 years to be able to nominate up to 25% of the board, both companies adopted bylaws allowing nominations only up to 20% and limiting nominating groups to 20, whereas my proposals had no such restrictions on the number of participants in nominating groups. Continue Reading →
Marriott International Inc $MAR is one of the stocks in my portfolio. They operate and franchise of hotels, corporate housing properties, and timeshare properties under numerous brand names which includes Bulgari Hotels & Resorts, The Ritz-Carlton Destination Club, The Ritz-Carlton, JW Marriott, EDITION, Autograph Collection, AC Hotels by Marriott, Renaissance Hotels, Marriott Hotels & Resorts, Courtyard by Marriott, SpringHill Suites by Marriott, Fairfield Inn & Suites by Marriott, Residence Inn by Marriott, TownePlace Suites by Marriott, Marriott ExecuStay, Marriott Executive Apartments, Marriott Vacation Club, Grand Residences by Marriott. Their annual meeting is coming up on 5/8/2015. ProxyDemocracy.org had the votes of two funds when I checked and voted on 4/30/2015. I voted with management 71% of the time and assigned Marriott International a proxy score of 71. Continue Reading →