- Increase the number of stockholders that can aggregate their shares to make a proxy access Board nomination from 20 to 50 stockholders,
- Eliminate a requirement to count individual funds within a mutual fund family as separate shareholders for purposes of satisfying the minimum ownership requirements to make a proxy access nomination, and
- Eliminate a requirement that a previously nominated proxy access nominee achieve a specified level of shareholder approval in order to be eligible for re-nomination.
Tag Archives | bylaws
As you may have read by now Microsoft Makes It Easier for Shareholders to Nominate Candidates to Board, another company where we filed for proxy access has adopted proxy access lite.
We were glad to play a role in negotiating the change on behalf of shareholders and withdrew our proxy access proposal contingent on the Board’s adoption of specified terms. Continue Reading →
Whole Foods Market (WFM) has informed me, without any attempt to negotiate terms over my submitted proposal, their board went ahead in adopting proxy access bylaws. See 8-K and amended bylaws. They have asked if I now want to withdraw my proposal. As I did for H&R Block, below I attempt to weigh the pros and cons of withdrawing my proposal. Continue Reading →
The key provisions included in the Company’s proxy access bylaw provision are substantially consistent with the Proposal. Given that the purpose of the Proposal has been fulfilled, we request that you promptly withdraw the Proposal.
Should I withdrawal my proposal and declare victory? Let’s examine. Continue Reading →
Prudential $PRU is winning widespread praise for adopting proxy access before even facing a proposal on that subject from shareholders. However, there is at least one provision that would be a deal breaker for me if I were negotiating with them on the topic. Continue Reading →
Many of us free ride on actions taken by active, long-term shareholders. These unsung heroes goad managers and boards to reach better decisions, make available desirable employment opportunities and, overall, push them to act like good corporate citizens. These active investors accomplish these things by talking to companies, preparing proxy proposals for all shareholders to consider, and offering recommendations on director elections and company-sponsored proxy measures.
Ralph Ward digs past the standard bullshit in his 2014 Boardroom Insider. Always plenty to chew on in a few short pages. Here’s a tidbit, which I hope will leave you wanting more, which includes more tips than you’ll find in pages and pages of other publications aimed at directors. Continue Reading →
An increasingly popular trend in recent years has been the adoption by Delaware public companies of an exclusive forum provision in their bylaws. An exclusive forum provision generally provides for the Delaware Court of Chancery to be the exclusive forum for certain disputes (including derivative actions, breach of fiduciary duty claims, claims arising pursuant
to the company’s charter or bylaws and other shareholder litigation) against the company — and prohibiting such suits in other jurisdictions. Expected benefits cited by companies of adopting exclusive forum bylaw provisions include decreased litigation costs, avoiding parallel litigation in multiple jurisdictions and the predictability of Delaware courts. Continue Reading →
According to a recent November 15 newsletter from Latham & Watkins LLP, most companies will adopt a “wait and see” approach for now. However…
If and when a company receives a shareholder proposal recommending board adoption of a proxy access bylaw, the board may respond (and seek to exclude the proposal from the ballot) by (i) adopting a proxy access bylaw (and claiming the Rule 14a-8 exclusion for substantial Continue Reading →
The respected scholar, Lawrence Hamermesh, writes about the model proxy access proposal published by United States Proxy Exchange (USPX) and asks why an organization whose motto (”Populus Constituit,” the people decide) is so reluctant to file mandatory bylaw proposals, instead of precatory proposals. (Precatory proxy access proposals, The Institute of Delaware corporate and Business Law, 11/15/2011)
Hamermesh speculates USPX members chose the precatory route because “a mandatory bylaw proposal won’t get nearly as high a vote as a diluted, precatory proposal.” He then goes on to argue that boards of directors should “not to take even a majority vote on a precatory proposal seriously,” since “if real bullets had been at stake the stockholders themselves wouldn’t have Continue Reading →
As I indicated in What Would Proxy Access Look Like if Done Right? the ruling that struck down the SEC’s main proxy access Rule 14a-11 didn’t strike down amendments to Rule 14a-8(i)(8), allowing shareowners to resume filing proxy access precatory and bylaw proposals. Those amendments were placed on hold by the SEC last October after the legal challenge to Rule 14a-11 because the 14a-8(i)(8) changes were “intertwined” with the marketwide access rule.
Before 1990, Rule 14a-8(i)(8) applied only to proposals ”used to oppose solicitations dealing with an identified board seat in an upcoming election” (also known as contested elections).
In 1980 Unicare Services included a proposal to allow any three shareowners to nominate and place candidates on the proxy. Shareowners at Mobil proposed a “reasonable number,” while Continue Reading →
The always creative Joe Grundfest, a Stanford Law School professor and former SEC commissioner, proposes that public companies adopt charter provisions to select in advance the forum where shareholder litigation would occur… Delaware, in most cases. He argues:
Forum selection clauses are common in commercial agreements. They are also broadly respected and readily enforced, even when characterized as contracts of adhesion. In contrast, forum selection clauses in charters and bylaws governing intra-corporate disputes are exceedingly rare. This presentation, which accompanied the 2010 Pileggi Lecture at the University of Delaware, documents the incidence and evolution of forum selection clauses in publicly traded entities. It analyzes the specific language used in these provisions, observes that these provisions tend to arise in distinct clusters, and suggests that the incidence of these provisions has increased dramatically (though off a small base) since the recent Revlon decision in Chancery. It also explores the causes of the divergence in incidence, and considers whether forum selection clauses are likely to be enforced by the courts. The analysis concludes that forum selection clauses should be enforceable whether included in a charter or bylaw, and should bind all shareholders, without regard to whether they were adopted pursuant to a shareholder vote or whether the shareholder acquired stock before or after adoption of the provision.
Privately held firms might best adopt elective forum selection provisions prior to an IPO, and publicly traded firms can adopt forum selection provisions in their charters or bylaws. Obtaining majority shareholder support for a charter amendment may be easier than some observers expect. If a corporation determines that it prefers not to amend its charter, board action is sufficient to amend the bylaws, as recently demonstrated by Chevron. The benefits of adopting a forum selection provision will likely exceed the costs for most entities. If this calculus is correct, there should be a large increase in the incidence of intra-corporate charter or bylaw forum selection provisions in coming years.
Read further discussion of the concept by Steven M. Davidoff (A Litigation Plan That Would Favor Delaware, NYTimes, 10/26/2010) who clarifies the provision would only be effective for state law claims, such as those involving breaches of fiduciary duty, not federal claims such as securities fraud charges. Watch for the number of companies with such provisions to quickly spike well beyond the current 23 companies. This move is likely to cut down the incidence of litigation; will shareowners still be protected? For additional background, see Are Delaware Courts “Losing” Cases on Delaware Corporate Law Filed Elsewhere, Delaware Corporate and Commercial Litigation Blog, 4/27/2010.