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.
Tag Archives | resolution
Restaurant Brands International (RBI), parent of Tim Hortons, Burger King and Popeyes, announced its decision to purchase only chicken raised without antibiotics important to human medicine by the end of 2018, a major sustainability milestone for the world’s third-largest fast food restaurant operator.
RBI came to an agreement in March 2016 with As You Sow,a non-profit shareholder advocacy group, to set timelines to prohibit the use of medically important antibiotics in its global meat and poultry supply chains. In response to this commitment, As You Sow withdrew a shareholder resolution calling for reduced antibiotic use in the Company’s products. Continue Reading →
Disclose Climate Lobbying: Resolutions Filed at Oil and Gas Companies
Encouraged by the forward‐looking actions addressing climate change at the Paris Climate Conference (COP21) in December, investors have filed shareholder resolutions at 11 oil and gas companies asking them to disclose climate lobbying activities. The resolutions urge the companies to fully disclose their lobbying activities and expenses (direct and indirect through trade associations) and to review their public policy advocacy on energy policy and climate change. Let’s get oil and gas companies to disclose climate lobbying! I sincerely hope readers of Corporate Governance (CorpGov.net) will vote in favor of these resolutions as they appear on corporate proxies. Monitor how others are voting at Proxy Democracy. If you own stock in other oil and gas companies, consider filing similar resolutions. Don’t know how? Check out our Shareowner Action Handbook. Take Action! Continue Reading →
Recently, with the revelations about Exxon’s past support for climate denial organizations hitting the news, there has been a fresh interest in the ways oil companies have used their lobbying and contributions to oppose climate change solutions. For example most oil companies are members of the Chamber and American Petroleum Association, which recently sued the EPA opposing its clean power plan. Their money and reputation line up working to block regulations that would reduce GHG emissions. Continue Reading →
Here’s one of the most interesting proxy proposals I have seen so far during this new season. I wasn’t aware of similar resolutions filed by Zevin until recently notified by Timothy Smith. If BNY Mellon is a PRI signatory, why are they consistently voting against what PRI stands for? Let’s see more proposals like this. It is like calling out green-washers for polluting. Continue Reading →
Newground Social Investment is looking for a Massey Energy shareholder to file a corporate governance resolution regarding vote-counting. They found out late last week that the shareholder that they were teaming up with did not qualify to propose the resolution, so they are scrambling at the last minute to find another Massey shareholder that does qualify to propose the resolution.
Companies (under Delaware law) can use variant vote-counting formulas that severely disadvantage shareholders, such that majority votes (using the required SEC formula for determining resubmission eligibility) get reported out to shareholders and the press as failing.
Massey did this last year on a shareholder-sponsored resolution — reporting a 53% vote as garnering only 36.8%. Yet, the company counts differently for management-sponsored proposals — but in each instance they use the formula that most favors management.
The Seattle Times ran a story about this issue which provides further information.
It’s a very good resolution that, because it addresses fairness and shareholder democracy, should be equally appealing to progressive or conservative alike.
It will be a 1st-year resolution at Massey.
At another company Newground got an 17.8% 1st-year vote last year — this was with proxy services recommending against it. This year the proxy advisory services are going to reverse course and recommend for it, so with that (along with everything else that’s gone on at Massey in 2010), this should end up being a very successful undertaking.
As reported in Risk & Governance Blog (1/13/10), theCorporateCounsel.net Blog (1/13/10), GlobalProxyWatch (1/15/10), and by Gary Lutin via e-mail (1/15/10), Houston-based Apache has sued shareowner activist John Chevedden, contending that he failed to meet the proof-of-ownership requirements in SEC Rule 14a-8(b) required to submit a resolution. See Apache v Chevedden.
Chevedden provided documentation of his ownership but Apache contends he didn’t submit enough information to trace the shares through to a record holder. Apache bypassed the normal route of first requesting a no-action letter from the SEC, choosing instead to go directly to court and to recover costs from Chevedden. To me, that looks like a slapp suit, designed to intimidate Chevedden and other activists with mounting legal costs and simple exhaustion.
Apache has a long history of rejecting the rights of shareowners to influence management decisions. In 2007, “G. Stephen Farris, CEO of energy company Apache, argued that shareholder proposals should be banned outright, or absent that, resubmission thresholds should be raised to 33, 40, and 45 percent.”
However, even the hard-line U.S. Chamber of Commerce questioned the legality of an all-inclusive bylaw: “Under federal case law, a corporate bylaw (to opt out of allowing shareowner resolutions) … cannot act as ‘a block or strainer to prevent’ shareholder proposals from inclusion in a company’s proxy materials.” (Non-Binding Proposals Defended, RMG, Risk & Governance, 10/12/07)
Here’s what others had to say:
As reported by Risk Metrics Group– “It’s fairly unusual for a company to sue its own investors, and it’s even more unusual to sue an investor before an SEC staff ruling,” noted Cornish Hitchcock, a Washington-based attorney who represents labor funds in no-action matters.
The RMG article says the lawsuit appears to be an attempt by Apache to get around the SEC’s no-action ruling in October 2008 that rejected a similar challenge where SEC staff said that a written statement from an “introducing broker-dealer constitutes a written statement from the ‘record’ holder of securities,” as required under the federal proxy rules.
Federal judges aren’t bound by SEC staff opinions, and may have a different opinion on what constitutes proof-of-ownership. The RMG article goes on to recount the successful activism of Chevedden and his network of retail investors in recent years on various issues. (Disclosure: I am one of those network members.) Those victories have angered corporate officials, especially when we submit more than one proposal on different topics at the same company. However, the SEC has held the group is not in violation since the filings are by different holders, with Chevedden acting essentially as our agent.
Broc Romanek, at theCorporateCounsel.net Blog, appears to share the opinion of issuers with regard to Chevedden assisting other shareowners with their proposals, “Many corporate secretaries will be cheering to hear that Chevedden was recently sued over his efforts to submit a proposal (although this situation doesn’t involve alter egos).”
Romanek goes on to quote an anonymous member of CorporateCouncil.net: “I am glad they are taking Chevedden to court. More companies should make sure his shenanigans have some real consequences. If he started getting his butt hauled into court all across the country, then his proposals would cost more than the price of a stamp.”
That attitude simply reinforces my initial opinion that this is nothing more than a slapp suit. Escalate the cost dramatically and shareowners will be too intimated to file resolutions. Chevedden’s resolution to require simple majority votes isn’t even binding on the board if passed by shareowners. My opinion is that owners of a corporation shouldn’t be dragged into court for making a suggestion to be voted on by other owners.
GlobalProxyWatch pointed out one irony: “Apache’s in-house governance domo is none other than Sarah Teslik, ex investor champion-in-chief at the Council of Institutional Investors. If Apache succeeds, expect similar tactics from other firms seeking to block resolutions like Chevedden’s.”
Gary Lutin’s e-mail notes, “Mr. Chevedden provided records that he did in fact own shares, but the financial service firms that confirmed his position did not appear in the records of registered ownership. Leaving aside the comical aspects of this case, the court filing shows clearly that our current system of defining ownership is dysfunctional.”
“Whether you think this effort to block a shareholder proposal is proper or not, I assume you will agree that there is something wrong with rules that allow this argument to be made. What seems like a simple matter of defining ‘ownership’ of stock has become a real challenge, especially in the context of recently evolved securities lending and derivatives practices, and needs to resolved before anyone can sensibly consider what kind of ‘plumbing’ hardware to order.”
I think Lutin’s comments are spot on. With street name registration, how can Apache know if Chevedden is really a shareowner? (although, appears obvious in this case that he is) How can anyone expect Chevedden to submit more in the way of proof? He’s already submitted a letter from his broker and, as I recall, another entity up the chain.
As we point out in our draft petition to the SEC, we retail shareowners aren’t really shareowners at all. We simply trade in “security entitlements.” The further we stray from direct registration, the more complicated it becomes to enforce the rights of ownership.We moved to the convoluted system we have now because it was the easiest way to get through a paperwork emergency that was bankrupting dozens of brokers. Direct registration wasn’t feasible because we didn’t have adequate computer power. Those days are over. Isn’t it time to move on to direct registration where companies know who there owners are and shareowners can more easily communicate with each other?