Tag Archives | no-action

Gadfly Proposals Reduce Value?

Gadfly proposal on your corporate proxy? One implicit conclusion from a recent academic study is that you should short the company as soon as the SEC disapproves the company’s no-action request, since a proposal from a gadfly is likely to reduce the company’s value. Even though their intent is primarily to show why managers

Deal Professor Envisions Corporate Gadfly

Starting with Corporations

generally oppose proposals, that is the takeaway investment strategy one might conclude from a paper by John G. Matsusaka, Oguzhan Ozbas and Irene Yi entitled Why Do Managers Fight Shareholder Proposals? Evidence from No-Action Letter Decisions. (Why Do Managers Fight Shareholder Proposals, pdf)

Investors Skeptical of Gadfly Proposals

Researchers found a statistical correlation between Securities and Exchange Committee (SEC) staff decisions to block a no-action request and negative abnormal returns over the period of 2007-2016, “suggesting that investors agree with managers that these proposals are value-destroying.” “[O]ur main finding is that the market responded positively to the granting of a no-action letter.” “Investors are not particularly skeptical of proposals by unions and public pensions, but appear to view proposals by individual ‘gadfly’ shareholders as value-destroying.” Continue Reading →

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Business Roundtable to SEC: Muzzle Shareholders

proxymonitorsmeasurecsmypropsAs I indicated yesterday, I have been contacted by several reporters for comments on the latest screed from the Business Roundtable seeking to muzzle the rights of shareholders. Although I have much more productive ways to occupy my time, it does make sense for me to provide at least some response, since the Business Roundtable names me among those “pursuing special interests… frequently at a significant cost to the company.”

Their statistics do not come from an objective third party, such as Proxy Insight, but from the conservative Manhattan Institute‘s Proxy Monitor (funded in part by the Koch Family Foundations), covering only 250 out of thousands of American companies. The Business Roundtable titled their report Responsible Shareholder Engagement And Long-Term Value Creation: Modernizing the Shareholder Proposal Process. Don’t be fooled by the numbers they use, claiming few proposals pass. The Business Roundtable doesn’t count proposals that don’t make it to the proxy because proponents and companies have reached agreement. They don’t count proposals filed at the thousands of small companies, which tend to have poorer corporate governance practices. ‘Modernization’ for the Business Roundtable means moving the SEC further and further from its primary mandate of ‘investor protection’ by creating a democracy-free zone for entrenched managers.  Continue Reading →

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Foiled Without Binding Proxy Access Proposals

Foiled Without Binding Proxy Access Proposals

Foiled Without Binding Proxy Access Proposals

There will be no rush to binding proxy access proposals, thanks to a July 21 denial of a no-action request filed by H&R Block. Corporations (HRB) continue with Wile E. Coyote type plots to derail genuine proxy access. See this incoming no-action request from Microsoft (MFST). However, in the case of H&R Block we foiled the latest plot to keep corporate governance a democratic-free zone without resorting to binding proxy access proposals. Continue Reading →

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RIA Hands Untied by SEC No-Action Denial

RIA Hands Untied

RIA Hands Untied

RIA hands untied by Newground Social Investments team and the SEC’s refusal to grant a no-action letter to Baker Hughes (BHI, $BHI) on February 22, 2016. Congratulations to Bruce Herbert and staff at Newground, as well as to their advisors.

We have discussed the importance of not counting abstentions before at Simple Majority Vote Counting Initiative for Proxies. Bruce has worked tirelessly in chipping away at vote counting deception for years… making some progress. However, what we are celebrating here are two precedents established that will ease the burden faced by Registered Investment Advisors (RIAs, Investment Advisor or Investment Adviser?) and their clients: Continue Reading →

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SEC Reverses No-Actions Under Rule 14a-8(i)(9) On Request

John Chevedden

John Chevedden

Just a quick note to other shareholders who have filed proxy proposals this season. If the company you filed with requested and obtained a no-action letter from the SEC under Rule 14a-8(i)(9), you might obtain a reversal of that sanctioned exclusion. However, as far as I know, you need to ask for reconsideration. I don’t think the SEC is automatically reversing such letters without being requested to do so by the shareholder proponent. See letters to shareowner activist John Chevedden below.

As previously reported (SEC Withdraws No-Action: Rule 14a-8(i)(9) Suspended), the SEC has essentially suspended Rule 14a-8(i)(9) Conflicts with company’s proposal. Chair Mary Jo White issued the following: Continue Reading →

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SEC Creates Turmoil with Whole Foods No Action on Proxy Access

Proxy Access (P&I)

Pensions & Investments

Apologies to those tired of reading about the issue of proxy access at Whole Foods. However, the SEC’s no action letter is a real watershed moment in the long struggle for proxy access, which began in earnest for me with a rulemaking petition in August 2002 but which others have been puruing for decades. Last Friday I received a letters from the Council of Institutional Investors (CII) and the Marco Consulting Group Trust in support of my December 23, 2014 appeal. (See below or CII site.

I am delighted to see the growing concern and support from investors for my appeal. As has been pointed out in the press, we are now witnessing the beginning of an avalanche of copycat filings. See Continue Reading →

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Road to Proxy Access Altered Again

Road to Proxy Access (Photo by Erik Johansson)

Road to Proxy Access (Photo by Erik Johansson)

… If the stockholder is to regard himself as a continuing part-owner of the business in which he has placed his money, he must be ready at times to act like a true owner and to make the decisions associated with ownership. If he wants his interests fully protected he must be willing to do something of his own to protect them. This requires a moderate amount of initiative and judgment.  – Benjamin Graham and David Dodd, Securities Valuation, 1934

The most fundamental means for shareholders to act like true owners is to help decide who will represent their interests on the board of directors. It is not so much independent directors that shareowners want, but directors who are dependent on our vote – accountable to us, not to the corporate managers they oversee on our behalf.  Obtaining the right to proxy access has been a long and perilous road.

On December 1, 2014, SEC staff effectively cut the road, giving a free pass to every group of entrenched board members and managers that seeks to prevent proxy access and direct accountability to shareowners.  Continue Reading →

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United Natural Foods (UNFI) Moves on Special Meeting Proposal

Manhattan InstituteUnited Natural Foods logoThe Manhattan Institute‘s Proxy Monitor Project would call it another failure by gadfly shareholders, since United Natural Foods Inc. (UNFI) filed and was granted a no-action request by the SEC to exclude our proposal to allow shareowners with 15% of the outstanding UNFI shares to call a special meeting. Since the proposal cannot receive a majority vote from shareowners, the Proxy Monitor Project and SEC Commissioner Daniel Gallagher will count the proposal as a loss for shareowners and a waste of money for the corporation. Continue Reading →

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United Natural Foods (UNFI) & Hain Celestial (HAIN): Win or Loss?

United Natural Foods logoHain CelestialWith John Chevedden‘s help, I recently submitted shareowner proposals to United Natural Foods Inc. (UNFI) and The Hain Celestial Group, Inc. (HAIN). Both have asked the SEC for no-action letters [UNFI (UNFI no-action 8-15-2014 pdf) and HAIN] because they plan to introduce their own proposals on the same subjects. The SEC is likely to grant both requests. Shouldn’t such actions be counted as ‘gadfly’ wins by pundits like the Deal Professor? More importantly, should the SEC grant such no-action requests? Continue Reading →

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Quick Bites on Corporate Governance

J. McRitchie

J. McRitchie

CorpGov.net publisher/shareowner activist, James McRitchie in the news.

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Quick Bites on CorpGov

UnknownDon’t miss the following great reads:

 Activist shareholders’ top priorities for 2014. A must read for directors and shareowners alike. Here’s the first paragraph.

Many of us free ride on actions taken by active, long-term shareholders. These unsung heroes goad managers and boards to reach better decisions, make available desirable employment opportunities and, overall, push them to act like good corporate citizens. These active investors accomplish these things by talking to companies, preparing proxy proposals for all shareholders to consider, and offering recommendations on director elections and company-sponsored proxy measures.

Ralph Ward digs past the standard bullshit in his 2014 Boardroom Insider. Always plenty to chew on in a few short pages. Here’s a tidbit, which I hope will leave you wanting more, which includes more tips than you’ll find in pages and pages of other publications aimed at directors. Continue Reading →

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Proxy Advisor Competition at Cisco OK'd by SEC

ciscocisco

Mark Latham came up with a brilliant idea in the late 1980s: Shareowners should use their corporation’s funds to pay for external evaluations of governance and performance of the board and management. Shareowners would vote to choose among competing organizations to provide this service.

It was a simple concept but SEC rules made subsequent proposals unnecessarily complex and excluded advice on director candidates, often among the most critical decisions on a proxy. Continue Reading →

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Noteworthy Proposal to Cap Pay Ratio at Microsoft (MSFT)

qube-logomicrosoftA proposal by Qube Investment Management, which owns 10,208 shares of Microsoft ($MSFT), to cap pay has been challenged through the “no-action” process. See incoming correspondence to the SEC. The resolved clause of Qube’s proposal reads as follows:

Resolved: The the Board of Directors and/or the Compensation Committee limit the average individual total compensation of senior management, executives and all other employees the board is chanted with determining Continue Reading →

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