My wife and I don’t have the resources to or stock holdings to allow us to file 75 proxy access shareholder proposals, like New York City Comptroller Scott Stringer’s Boardroom Accountability Project. However, I have been writing about proxy access for 20 years and, together with Les Greenberg, filed the petition in 2002 with the SEC that many have credited with renewing interest in the subject. We hope our efforts, although small, contribute to making companies more democratic and profitable.
The SEC’s proxy access Rule 14a-11, which was to apply to all companies subject to SEC proxy rules, was vacated after a court’s 2011 decision in Business Roundtable v. SEC that the SEC had failed to conduct adequate an cost-benefit analysis. Therefore, proxy access rights must be established on a company-by-company basis. Subsequently, CFA Institute’s Proxy Access in the United States: Revisiting the Proposed SEC Rule found proxy access:
- Has the potential to enhance board performance, raising US market capitalization by up to $140.3 billion
- Would “benefit both the markets and corporate boardrooms, with little cost or disruption.”
We have filed the following proposals that have either been voted or will be voted in 2015:
Proxy Access at CSP Inc. (CSPI)
This is a small company that could use the voice of shareholders on the board. The proposal required proponents to hold at least 3% of CSPI’s stock for 2 years and would have allowed them to place nominees number up to 34% of board. Proposal language. Item No. 5: Advisory vote to approve proxy access for shareholders, voted as follows:
- For: 788,259
- Against: 821,703
- Abstain: 13,487
I consider the vote results to be very good, considering the variation in thresholds means it didn’t get the support of proxy advisors and also that blank votes automatically were voted against it.
Proxy Access at Whole Foods Market (WFM)
The proposal required proponents to hold at least 3% of WFM’s stock for 3 years and would have allowed them to place nominees numbering up to 20% of board on the proxy. (Proposal now being revised.) Meeting postponed. Much has been written about this, with the SEC Chairwoman essentially Whiting-out Rule (i)(9) with regard to no-action letters for the proxy season. They have postponed their annual meeting until September. See:
- Whole Foods Fallout? SEC Suspends ‘No Action’ Relief for Competing Proxy Access Proposals
- Why Is Whole Foods Afraid of Its Shareholders?
- Proxy Access: Keith Higgins Speaks on SEC’s (i)(9) Review
Proxy Access at Apple (AAPL)
The proposal required proponents to hold at least 3% of AAPL’s stock for 3 years and would have allowed them to place nominees numbering up to 25% of board on the proxy. Proposal language. 6. A shareholder proposal entitled “Proxy Access for Shareholders,” as described in the proxy materials. This proposal was not approved and was voted as follows:
- For: 1, 314,981,629
- Against 2,036,262,112
- Abstained 18,969,065
These results were good considering the outstanding performance of Apple, some problems with specific provisions of the proposal that may require more legal focus, opposition from Glass Lewis, CalPERS and others because of language in the proxy the appears to commit to giving the issue serious consideration (coming back with their own proposal next year).
Proxy Access at Citigroup (C)
The proposal negotiate with Citigroup require proponents to hold at least 3% of Citi’s stock for 3 years and would allow them to place nominees numbering up to 20% of board on the proxy. Our agreed language limits a nominator to 20 shareholders. Citigroup has agreed to support. Proposal language. The meeting will be held on April 28, 2015. I believe this will be a huge win, since Citigroup is so large and influential.
Proxy Access at eBay (EBAY)
We withdrew our proposal to defer to the New York City Comptroller, which filed a similar proposal.
Proxy Access at United-Guardian (UG)
I did negotiate with UG and made minor modification in the proposal, which would require proponents to hold at least 3% of UG’s stock for 3 years and would allow them to place nominees numbering up to 25% of board on the proxy. UG will oppose the proposal at their meeting, which will probably be held in mid-May.
Proxy Access at Amazon (AMZ)
The proposal requires proponents to hold at least 3% of AMZN’s stock for 3 years and would allow them to place nominees numbering up to 25% of board on the proxy. The Amazon meeting will probably be held mid- to the end of May.
Proxy Access at Wal-Mart (WMT)
The proposal requires proponents to hold at least 3% of WMT’s stock for 3 years and would allow them to place nominees numbering up to 25% of board on the proxy. The Wal-Mart meeting will probably be held near the beginning of June.
Proxy Access at Biogen Inc. (BIIB)
We worked out a deal with BIIB to withdraw the proposal with an agreement that the board would file bylaws requiring proxy access proponents to hold at least 3% of BIIB’s stock for 3 years and would allow them to place nominees numbering up to 20% of board, with groups limited to 20. See 8-K reporting the adoption of a proxy access bylaw as well as their name change from Biogen Idec Inc. to Biogen Inc.
I feel especially good about this since BIIB has substantially outperformed the market for last 1, 2, and 5 year periods. It is a sign that adoption of proxy access isn’t necessarily seen as a criticism of current board but is seen as good governance. The meeting will probably be around mid-June.
Proxy Access at H&R Block (HRB)
This proposal was recently submitted and requires proponents to hold at least 3% of HRB’s stock for 3 years and would allow them to place nominees numbering up to 25% of board on the proxy. I expect the meeting will probably be around mid-September.
We expect to file several more proxy access proposals for meetings to be held even later in the year.
Comments are closed.