Thanks to Scott Hirst‘s articles and papers on the subject, I can borrow his catchy label for one of biggest current problems in corporate governance. Frozen charters are supermajority provisions that are impossible to repeal. He appears to attribute that to the 2012 change by the New York Stock Exchange (NYSE), which changed its policies to prohibit brokers from voting uninstructed shares on corporate governance proposals. I would lay a larger share of the blame on founders who wrote the frozen charters to forever retain a large degree of control. Regardless of who is to blame, frozen charters are a problem that needs fixed. Managers, boards, shareholders, Republicans and Democrats should all be able agree on a solution. Continue Reading →
Tag Archives | McRitchie
Some corporations and lobbying organizations claim small shareholders (Chevedden, McRitchie/Young, and the Steiners) submit 40% of proposals, most fail and we are forcing companies to waste money. Actually, small shareholders are critical to democracy.
This is an old complaint. A 1947 hearing on proxy rules before a House Committee charged shareholder proposal rules would provide a “field day for crackpots.” [165 Com. & Fin. Chron. 273 (May 22, 1947)] A study of 286 shareholder proposals submitted between 1944 and 1951 found that 137, or 48% were submitted by the Gilbert brothers, the so-called crackpots of their day. In 1952, they owned from 5 to 324 shares in 118 companies. Continue Reading →
For years, the “Chevedden group” (Chevedden, McRitchie/Young and Steiner) has focused almost exclusively on governance proposals. More democratic corporations are likely to listen to their shareholders on other issues as well. Democracies facilitate voice and the exchange of ideas. Fighting for environmental and social issues, while extremely important, felt like addressing symptoms, rather than root causes.
Chevedden group proposals seek to declassify boards, require majority votes to elect directors, allow proxy access, and allow shareholders to call special meetings. Since many large cap companies have now adopted such provisions, we are broadening our scope to also focus on other issues. Below are some preliminary results for 2018. Continue Reading →
The November 15 SEC Roundtable on the Proxy Process will include me on the SEC Shareholder Proposal Panel. Public announcement with instructions for submitting comments. I will only have a few minutes at the Roundtable. What should I emphasize? Where should I stay in DC?
Take Action: Readers of CorpGov.net know far more than I do. Please email your suggestions and supporting evidence. Without your help, I will ramble off topic to connected tangents, difficult to explain in a few seconds. This post is sure to be an example. Continue Reading →
We have an early partial victory at Clorox (CLX). Real victory at Clorox will depend on getting out the vote. Yes, that is the same as what is required for government elections in November if we want change. The Clorox meeting is also expected in November.
High voter turnout is required at Clorox because we seek, now with the Board’s endorsement, to overturn a supermajority provision in the Certificate of Incorporation that requires 80% of the voting power vote FOR repealing supermajority requirements for approval of business combinations. For that provision to be repealed, we need to turn out a huge percentage of shareholders and get the to vote in favor. Following is the “Resolved” portion of our proposal: Continue Reading →
The Ford Motor Company ($F) challenged my resolution on Transparent Political Spending and lost. I created a new posting category, “SEC no-action letters.” Posts under this category will include what I believe are precedent setting decisions. By including them on CorpGov.net I will be creating a searchable database going forward of significant decisions for ready future reference. Hopefully, it will reduce the need to recreate the wheel and will save on time defending similar proposals. Read the full no-action file at the SEC. Continue Reading →
Investor Response to Chamber: Letter
Representatives of hundreds of investors with trillions of dollars in assets delivered a letter to the SEC on November 9, 2017, An Investor response to U.S. Chamber’s Proposal to Revise SEC Rule 14a-8 (report).
We noted with interest the November 1, 2017, guidance contained in Staff Legal Bulletin No. 14I. While we are reserving judgment about how the guidance may apply in practice, we are particularly pleased by Director Hinman’s accompanying statement that the guidance is not intended to “make things easier or harder for one side or the other, . . . [but] to improve the process.” We strongly support that goal and plan to actively monitor the SEC staff no-action process during the upcoming proxy season to determine whether the goal was achieved.
- 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.
Salesforce.com, inc. develops enterprise cloud computing solutions with a focus on customer relationship management. Salesforce.com, inc. (CRM) is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of three fund families when I checked and voted. Their annual meeting is coming up on June 6, 2017
I voted FOR #7 the ability of shareholders to call a special meeting. See how and why I voted other items below. I voted with the Board’s recommendations 59% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →
As I indicated yesterday, I have been contacted by several reporters for comments on the latest screed from the Business Roundtable seeking to muzzle the rights of shareholders. Although I have much more productive ways to occupy my time, it does make sense for me to provide at least some response, since the Business Roundtable names me among those “pursuing special interests… frequently at a significant cost to the company.”
Their statistics do not come from an objective third party, such as Proxy Insight, but from the conservative Manhattan Institute‘s Proxy Monitor (funded in part by the Koch Family Foundations), covering only 250 out of thousands of American companies. The Business Roundtable titled their report Responsible Shareholder Engagement And Long-Term Value Creation: Modernizing the Shareholder Proposal Process. Don’t be fooled by the numbers they use, claiming few proposals pass. The Business Roundtable doesn’t count proposals that don’t make it to the proxy because proponents and companies have reached agreement. They don’t count proposals filed at the thousands of small companies, which tend to have poorer corporate governance practices. ‘Modernization’ for the Business Roundtable means moving the SEC further and further from its primary mandate of ‘investor protection’ by creating a democracy-free zone for entrenched managers. Continue Reading →
McRitchie Interview by Rafat
McRitchie interview by Rafat. At last week’s meeting of Whole Foods Market shareholders, I met with Matthew (Mateo) Rafat, whom I’d known of because of his series of posts at Seeking Alpha. He was the only one reporting what happened at shareholder meetings. This was the first time we had met in-person.
After the Whole Foods meeting, where my proxy access proposal received a 40% vote, Matthew and I grabbed a bite to eat. He then recorded the interview posted below. I’ve add some commentary below to make our discussion, especially my answers, a little more comprehensible.
We discussed issues of interest to many shareholders such as proxy access and how it differs from a proxy contest, why diversity is important, why shareholders submit precatory proposals rather than binding resolutions and a little about the rulemaking process. Continue Reading →
TK Kerstetter of Boardroom Resources, LLC, interviews James McRitchie, Publisher of CorpGov.net and Shareholder Advocate. I’ve pasted TK’s intro and video from Inside America’s Boardrooms below, followed by some additional comments. I hope you enjoy the show. Continue Reading →
Google Inc. (GOOG), a technology company that builds products and provides services to organize the information, is one of the stocks in my portfolio. Their annual meeting is coming up on 6/3/2015. ProxyDemocracy.org had the vote of one fund when I checked and voted on 5/28/2015. I voted with management 39% of the time and assigned Google Inc. a proxy score of 39.
View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Google Inc. 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →
Union Pacific Corporation (NYSE:UNP) is one of the stocks in my portfolio. Union Pacific is primarily a railroad operator. Their annual meeting is coming up on 5/14/2015. ProxyDemocracy.org had the votes of two funds when I checked and voted on 5/7/2015. I voted with management 50% of the time and assigned Union Pacific a proxy score of 50.
View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Union Pacific 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →
The Status of Proxy Access 2015:
“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” – Winston Churchill
This post is in response to a LinkedIn piece by Anthony Goodman of Tapestry Networks regarding the status of proxy access post the success of New York Comptroller Scott Stringer’s Board Accountability Project (with adopt of proxy access by Bank of America, Abercrombie & Fitch, Big Lots and Whiting Petroleum to date). While the “2015 Battle for Proxy Access” appears won, the war over access is far from finished. What is over is the “ambiguity” over whether there is unanimity amongst institutional investors, governance advocates and proxy advisors for the 3-3-25 standard or whether the mega mutual funds would support conflicting higher ownership thresholds and holding periods. We now know that the answer to that question is generally universal support for 3-3-20/25 standard. Continue Reading →
Starbucks Corporation $SBUX, which operates as a roaster, marketer, and retailer of specialty coffee worldwide, is one of the stocks in my portfolio. Their annual meeting is coming up on 3/18/2014. ProxyDemocracy.org had the votes of four funds (now more) when I checked and voted on 3/8/2015. I voted with management 81% of the time and assigned Starbucks a proxy score of 81.
View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Walt Disney 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →
The Walt Disney Company $DIS, which operates as a worldwide entertainment company, is one of the stocks in my portfolio. Their annual meeting is coming up on 3/12/2014. ProxyDemocracy.org had the votes of four funds when I checked and voted on 3/8/2015. I voted with management 79% of the time and assigned them a proxy score of 79.
View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Walt Disney 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →
Citigroup (C) and shareowner activist James McRitchie, who publishes the popular website CorpGov.net, reached an agreement this week on a proxy access proposal that would allow shareowners to place their nominees directly on the corporate proxy. Continue Reading →
Public dissent by directors should be encouraged, not penalized. If we don’t learn where directors stand on the issues and how they differ from each other, how do we know who to vote for? Two actions by CalPERS fifteen years apart are instructive. Continue Reading →
In a memorandum and order issued yesterday, Judge Louis L. Stanton, of United States District Court for the Southern District of New York, ruled John Chevedden’s motion to dismiss is granted. Omnicom’s motion for summary judgment is denied. “The clerk is requested to enter judgment dismissing the complaint, with costs and disbursements in favor of Mr. Chevedden according to law.” 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 →
On November 27, 2013 the SEC Announced the agenda and panelists for their 12/5/2013 Roundtable On Proxy Advisory Services. In the first session, participants will discuss, among other topics, the current use of proxy advisory services, including the factors that may have contributed to their use, the purposes and effects of using the services, and competition in the marketplace for such services. In the second session, participants will discuss, among other topics, issues identified in the Commission’s 2010 concept release on the U.S. proxy voting system, including potential conflicts of interest that may exist for proxy advisory firms and users of their services, and the transparency and accuracy of recommendations by proxy advisory firms. It is critical that members of the public, especially unrepresented retail shareowners submit comments, so your interests can be considered.
While the panelists look well qualified and reputable, none appear to represent retail shareowners. True, under the current framework Continue Reading →
Kansas City Southern ($KSU) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/2/2013. ProxyDemocracy.org had collected the votes of three funds when I checked on 4/26/2013. I also checked OTPP, which voted the same as CalSTRS and Calvert. I voted with management 86% of the time. View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime) Continue Reading →
Apple ($AAPL) is one of the stocks in my portfolio. Their annual meeting is coming up on 2/27/2013. ProxyDemocracy.org had collected the votes of five funds when I checked on 2/19/2012. They listed the votes of six funds voting as of yesterday. I voted with management 46% of the time. View Proxy Statement. I voted, despite David Einhorn’s attempt to get an injunction to block the vote on “Proposal 2” in Apple’s proxy statement, which would abolish a system for issuing preferred stock at its discretion, facilitate majority voting in director elections and establish a par value for the company’s common stock. Continue Reading →
TD Ameritrade Holding Corp. ($AMTD) is one of the stocks in my portfolio. Their annual meeting is coming up on 2/13/2013. ProxyDemocracy.org had collected the votes of only two funds when I voted on 2/7/2012. I voted with management 0% of the time. View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank will be voted in favor of management’s recommendations. (See Don’t Let Companies Change Shareholders’ Blank Votes) Continue Reading →
My proposal to declassify the board at United Natural Foods, Inc. ($UNFI) passed by an overwhelming margin of 87.89%:
- 38,086,048 for
- 5,248,963 against
See their 8-K filing. Text (pdf) of proposal and opposition. Of course, the margin would have been even higher without insider holdings and blank votes going to management. Have we turned the corner on declassification measures to the point where companies might as well throw-in the towel and declassify when faced with such proposals? Continue Reading →
Dreamworks Animation (DWA) ($DWA) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/29/2012. Voting ends 5/28 on Moxy Vote’s proxy voting platform, which had 4 recommendations “from good causes,” including 2 consolidations, when I checked and voted on 5/22. ProxyDemocracy.org had 1 fund voting. I voted with management 64% of the time. Continue Reading →
Gilead Sciences ($GILD) is one of the stocks in my portfolio. I previously blogged about how I voted. Last week, I attended their annual meeting on 5/10/2012 to present John Chevedden’s proposal #4 to allow shareowners to act by written consent. This is an important governance feature allowing shareowners to take action in times of emergency between annual meetings. Continue Reading →
Waste Connections ($WCN) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/18/2012. Voting ends 5/17 on Moxy Vote’s proxy voting platform, which had no recommendations when I checked and voted on 5/15. ProxyDemocracy.org had only 1 fund voting but it was CalSTRS, one of my favorites. I voted with management 67% of the time. Continue Reading →
The drama of a retail investor fending off a sweeping lawsuit by a $33 billion corporation took a dramatic turn today, as the United States Proxy Exchange (USPX) intervened, filing an amicus curiae (friend of the court) brief in Federal District Court in Houston.
John Chevedden, a retail investor and champion of shareowner rights, is known for filing insightful shareowner proposals, which frequently win majority votes at shareowner meetings. Over his career, he has filed more than a thousand. Corporations, viewing his populist form of corporate governance as an irritant, have tried to shut him down before. None, however, has done so as aggressively as Apache Corp, which filed suit against Chevedden earlier this year.
The lawsuit is in response to a shareowner proposal Chevedden filed to be voted on at this year’s Apache Corp. annual meeting. Apache is seeking a decision in federal court that they may ignore the proposal, and they are asking the court to force Chevedden to cover their legal expenses. (Apache’s Brief on the Merits)
Largely frivolous, the suit centers on a poorly written SEC rule about how to document share ownership for the purpose of submitting a proposal. Chevedden followed standard procedure accepted by shareholders and corporations over many years. He forwarded to Apache a letter from his broker confirming he had held at least $2,000 of Apache stock for a year. Apache did not accept that. Technically, SEC Rule 14a-8 says that a beneficial shareowner can prove ownership by submitting “to the company a written statement from the ‘record’ holder of your securities (usually a broker or bank) verifying that, at the time you submitted your proposal, you continuously held the securities for at least one year.”
Apache’s lawyers have advanced the position—contrary to standard practice followed with shareowner proposals for years—that a letter from a shareowner’s broker is not acceptable evidence of share ownership. They define the term “record holder” so narrowly that it would be largely impossible for proponents of shareowner resolutions—even large institutional investors—to ever actually “prove” they own shares. This leads quickly into murky questions of what it actually means to “own” shares and how one might go about proving such ownership.
The questions aren’t academic. An adverse ruling in the case could shut down most shareowners’ ability to file proposals. With Chevedden representing himself against a high-priced Houston law firm, an adverse ruling was highly likely.
That outcome became more remote today with the filing of the USPX amicus curiae brief. The brief is a tour de force, exploring all aspects of the at-issue SEC rule—its history, practical implications, accepted interpretation and treatment in recent SEC staff legal bulletins and no-action letters.
James McRitchie, who publishes the CorpGov.net blog, helped write the brief. Glyn A. Holton, executive director of the USPX, was the lead author. McRitchie commented today
Wow! I’m so proud to be a signatory to this brief … I feel almost like it is part of the Declaration of Independence or something. A $33 billion company… able to hire the most expensive attorneys in the world and our side with no legal counsel …
The clock is ticking. Apache Corp has to send their proxy materials to be printed soon, and the lawsuit must determine if Chevedden’s proposal will be included. Apache’s lawyers will be scrambling this weekend to prepare a response to the USPX brief by Monday. Trying to continue with a frivolous lawsuit in the face of a compelling brief from the USPX, it is not clear what they can accomplish. This may turn into one of those rare events where a small retail investor turns the tables on a large corporation and their expensive lawyers … and actually wins. We will find out in a few days. For further information, please contact USPX Executive Director Glyn A. Holton at 617.945.2484 or [email protected].
OK, so maybe the quote from me was a little over the top, but I really do feel that corporations, run largely by management – not by regular employees or shareowners, have too much control… especially after Citizens United. Let’s hope the judge has enough sense to recognize this case as a SLAPP suit aimed at intimidating shareowners. I’m not ready to roll over and play dead!
In contrast to Apache, whose CEO, G. Steven Farris, argued to the SEC that non-binding resolutions should be banned outright, when AmerisourceBergen received a 2010 proposal from Ken Steiner on the same topic as the one Chevedden proposed at Apache (eliminating all supermajority vote requirements), they put the proposal on the ballot as a binding company proposal and it was approved by shareowners on March 4, 2010. (AmerisourceBergen Re-Elects Three Board Members and Reaffirms Fiscal 2010 Expectations at Annual Meeting of Stockholders, Press Release, 3/4/10)