Proxy Access Win at KSW

Daniel Rudewicz, a USPX member, reports what I would term the first win under recently implemented SEC rules that once again allow proxy access proposal to be filed.  As reported earlier, Rudewicz filed a proposal at KSW, a Long Island City, N.Y.-based company with a $19.7 million market capitalization that furnishes and installs heating, ventilating, and air conditioning systems and process piping systems.

Rudewicz’s binding proposal calls for investors to hold at least a 2% stake for one year to be eligible to nominate director candidates for inclusion in the corporate proxy materials. I understand from Rudewicz that KSW has filed a no-action request but haven’t gotten a copy of the request or details as I write this.  It appears from KSW’s 1/5/2012 8-K filing that they will assert the proposal was “substantially implemented,” under SEC Rule 14-8(i). According to the 8-K filing:

On January 5, 2012, the Board of Directors of KSW, Inc. (the “Corporation”) adopted Amendment No. 1 (the “Amendment”) to the Company’s Amended and Restated By-Laws. By-Law 13 addresses procedures and requirements with respect to the nomination of persons for election as directors, and the Amendment requires that a shareholder must have beneficially owned 5% or more of the Company’s outstanding common stock continuously for at least one year in order to be eligible to make a nomination. A copy of the Amendment is filed as Exhibit 3.1 to this report and is incorporated herein by reference.

Read the adopted bylaw here. I would encourage Rudewicz to appeal any no-action letter request by KSW to exclude his binding bylaw request from the proxy, since the standard adopted, 5% held by a single shareowner, falls far short of the 2% group standard requested in his binding bylaw revision.

Yes, it is a great victory for shareowners, the first of many to come in company-by-company battles for proxy access. However, it is also a sign of the rear guard tactic some companies are likely to take. If the SEC grants a no-action request, it will be up to shareowners to decide what action to take next. If the company’s bylaw amendment is seen inadequate and a simple roadblock, shareowners could vote against board members at the upcoming meeting and/or could file additional resolutions next year.



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