I’m somewhat heartened by a recent CII announcement on access proposals:
We welcome the changes to Rule 14a-8(i)(8). We encourage Council members and other long-term shareowners to consider using this new tool in a focused and consistent manner that enhances the U.S. corporate governance model and contributes to the health and longterm value of public companies. More specifically, the Council believes that shareowner proposals to specify the procedures for proxy access should include language requiring a nominator or nominating group to have beneficially owned a meaningful percentage of the company’s voting stock continuously for a meaningful period of time.
I’m delighted CII encourages members to consider submitting proxy access proposals and agree thresholds should be “meaningful.” Of course, we think our thresholds, 1% held for two years or 100 shareowners with holdings to meet 14a-8 proxy proposal requirements, are “meaningful” but some may not share that opinion. We think requiring 100 shareowners to coordinate effort will result in good nominations, probably even better than those of 1% shareowners. Agreement among 100 is likely only around outstanding candidates well matched to the company.
We’ll soon find out what CII and others think. Glyn Holton, executive director of United States Proxy Exchange, thinks we’re headed toward a showdown between large institutional investors and retail shareowners. (Proxy Access Could Pit Shareholder Against Shareholder, Houston Chronicle, 11/24/2011)
Let’s hope we don’t have a divide and fail but, instead, a come together situation. That might result in an unstoppable force. I have a hard time imagining why institutional investors should consider the 3% held for 3 years as a standard. Why should they adopt the same or anywhere near the same baseline as Latham & Watkins LLP?
The CII statement is not unlike that of ISS, which said it will apply a case-by-case approach to recommendations on proxy access proposals, taking into account a range of company-specific and proposal-specific factors, including: (i) the ownership thresholds proposed in the resolution, (ii) the maximum proportion of directors that shareholders may nominate, and (iii) the method of determining which nominations should appear on the ballot if multiple shareholders submit nominations. Expect further updates “[i]n January 2012, as part of [its] policy update process, ISS expects to provide additional guidance (via FAQs and/or through other reports) based on an examination of the specific proposal texts.”
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