The Northern Trust Corporation (NTRS) is moving toward more democratic governance, thanks to a proxy access proposal submitted on my behalf by John Chevedden in November. Since I own no where near 1% of NTRS (market cap $23B), we would have been denied the right to file the proposal if the Chamber of Commerce, Business Roundtable and others had their way.
On December 12th, in response to the proposal, the Board of NTRS amended its bylaws to provide for proxy access. From the 8-K:
The Proxy Access By-law permits any stockholder, or group of up to 20 stockholders, who has maintained continuous qualifying ownership of 3% or more of the Corporation’s outstanding common stock for at least the previous three years and owns such common stock through the date of the annual meeting, to include in the Corporation’s proxy materials such stockholder’s director nominees constituting up to the greater of two individuals or 20% of the total number of directors, provided that such stockholder and its nominees satisfy the requirements specified in the Proxy Access By-law.
Of course, I would have preferred no limit on the number forming a group and being able to nominate up to 25% if the board, but $NTRS has made a good start.
NTRS: Failing to Give Credit Where Credit is Due
We would have gladly withdrawn the proposal had NTRS requested it. Instead, they requested and received a no-action letter from the SEC.
Those keeping score, like the U.S. Chamber of Commerce Center for Capital Markets Competitiveness and the Business Roundtable, will simply mark this year’s proposal as another one filed by a small shareholder, who should not have the right to file, and who was on the losing side of a no-action request. They would view it as a clear defeat for a “gadfly” shareholder, who “forced” NTRS spend a considerable sum to make legal arguments with no benefit to other shareholders. (see Shareholder Society Better Chamber Mantra)
It seems to me, all shareholders won. We saw no evidence the Board was taking up proxy access bylaws until after the proposal was submitted. While we applaud NTRS for implementing the proposal, it would have been nice to acknowledge the role played by a shareholder for initiating the change. As is typical, no mention was made of a proxy proposal. Shareholders are rarely recognized as playing any role in corporate governance beyond voting their proxies, and even that is discouraged. (Small Investors Support the Boards. But Few of Them Vote)