Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

New York City Comptroller Scott M. Stringer, on behalf of the $160 billion New York City Pension Funds, has submitted proxy access shareowner proposals to 75 companies.  The proposals request a bylaw to give shareowners who meet a threshold of owning three percent of a company for three or more years the right to list their director candidates, representing up to 25 percent of the board, on a given company’s ballot.

The 75 companies were selected based on three priority issues: climate change, board diversity and excessive CEO pay.  While some companies met multiple screening criteria, resolutions were filed at:

  • 33 carbon-intensive coal, oil and gas, and utility companies;
  • 24 companies with few or no women directors, and little or no apparent racial or ethnic diversity; and
  • 25 companies that received significant opposition to their 2014 advisory vote on executive compensation.

According to a Georgeson report, the number of proxy access proposals grew in 2014. There were 13 proxy access proposals submitted to a vote during the 2014 proxy season, up from 11 in 2013. Support rose significantly from an average of 31.7% of votes cast in 2013 to 39.1% of votes cast in 2014, the largest such increase of any proposal this year. In addition, the number of proposals receiving majority support doubled from three in 2013 to six in 2014.

The Georgeson report further notes that institutions were less supportive of proposals that would afford proxy access rights for a collective group of holders who own 1% of the total outstanding shares for a continuous period of one year. In 2014, there were four proposals of the sort, which averaged a mere 4.8% of votes cast in support. In contrast, support for proposals that sought proxy access rights for a nominator who owns 3% of the company total outstanding shares for a continuous period of three years averaged 55.7% of votes cast in favor, with six of eight proposals receiving majority support.

ISS’s policy it to make a recommendation on a  case-by-case on proposals to enact proxy access, taking into account, among other factors:

  • Company-specific factors; and
  • Proposal-specific factors, including:
    • The ownership thresholds proposed in the resolution (i.e., percentage and duration);
    • The maximum proportion of directors that shareholders may nominate each year; and
    • The method of determining which nominations should appear on the ballot if multiple shareholders submit nominations

It’s likely many of these proposals may succeed.  The recipients have a tough choice to make – adopt the by-law or put it to a vote.  If successful, others who wish to advance other issues are likely to file many more such proposals in the future.


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The views expressed herein are the views of the blogger and not those of Stinson Leonard Street or any client.