Nice to see the Gretchen Morgenson of the New York Times writing about my appeal of the SEC’s no-action letter allowing Whole Foods Market to exclude my proxy access proposal. (Whole Foods’ High Hurdle for Investors, 1/3/2015) As Morgenson, writes:
Other companies seem to have been closely watching the S.E.C.’s ruling. Since the Dec. 1 decision, 10 other companies have asked the S.E.C. for permission to exclude nomination proposals from 3 percent shareholders. They include Arch Coal, Cabot Oil & Gas and Marathon Oil, and they make the same argument about conflicting proposals.
Morgenson doesn’t highlight that my proposal allows groups to meet a threshold, whereas management’s limits nominators to one shareowner. No one will meet Whole Foods’ threshold once Baillie Gifford sells off a few more shares, as they have been doing for years. Nor does she mention either of the reasons I presented in my appeal (McRitchieAppealNo-action12-23-2014 pdf).:
- The originally intended definition of “directly conflicts” has been perverted by more recent staff interpretations of the rule. It was limited to very narrow circumstances where adoption of competing proposals could be harmful to shareowners.
- The was rule never intended to allow companies to substitute their own proposals when generated in reaction to those submitted by shareowners.
As a former regulator concerned with governance, the main issue for me (during the appeal process) centers around the SEC rewriting a rule without going through the public notice process. That’s what they did decades ago to take away proxy access. AFSCME sued and won, pointing out they reinterpreted rule without public notice (AFSCME v AIG). We then got proxy access back for a few months until the SEC wrote a rule banning it. Then we got them to write new rules allowing it. Now staff is essentially eliminating our rights by again misinterpreting Rule 14a-8(i)(9).
The process used in the no-action process is important. Understandably, Morgenson focuses on the power struggle between shareowners and company management but she does so at a very surface level. If the Commission ever hears my appeal, it will be discussing these more nuanced issues, not the merits of proxy access.
- Appeal of No-Action on Proxy Access at Whole Foods Markets (WFM).
- Proxy Access: Two More Companies Seek Exclusion Via Counterproposal
- Whole Foods Nomination Fight Becomes More Complicated (NASDAQ:WFM)
- This “Appeal” Of Whole Foods’ No-Action Letter Isn’t Very Appealing
- The Whole Foods No Action Letter and Shareholder Access