The Council of Institutional Investors says the way so-called proxy access policies have been drafted often is unworkable and possibly toothless. The group, known as CII, represents 118 pension funds and endowments that manage more than $3 trillion in assets. It plans to release a checklist of “best practices” on Wednesday.
Proxy access gives shareholders greater clout to oust directors and influence strategy by letting them list competing board candidates on corporate ballots. But the push comes at a time when activist investors also are trying to force change on some company boards.
As of late June, all 32 businesses that had implemented proxy access—including Nabors Industries Ltd., Arch Coal Inc. Priceline Group Inc. and Marathon Oil Corp.—didn’t comply with at least one of the council’s seven best practices, said Amy Borrus, CII’s interim executive director. Other companies are considering proxy-access policies with similar mechanisms that “could make access difficult to use,’’ she added.
Proponents of proxy access may challenge weak versions by pursuing further corporate activism, however. “We aren’t going to accept the illusion of access,’’ vowed New York City Comptroller Scott M. Stringer, who oversees pension funds with assets of $165.5 billion. “Unworkable bylaws aren’t going to cut it.”
Last fall, he launched a campaign to let shareholders propose directors at 75 companies. The city’s resolutions already have passed at 41 of 63 concerns, including Priceline and Marathon.