Corp Fin refuses to allow exclusion of new form of proxy access fix-it proposal – Cooley PubCo

We think the word they are searching for is “motivated.”

You may have thought that, after the series of staff no-action positions allowing exclusion of so-called “fix-it” proposals during the last proxy season, we had seen the last of them. If so, you would be forgetting how persistent (or relentless, depending on your point of view) these proponents are.  And this time, the staff has rejected the no-action request of H&R Block—once again the unfortunate trailblazer— which had sought exclusion of another proxy access fix-it proposal—this time to eliminate the cap on shareholder aggregation to achieve the 3% eligibility threshold—from the prolific John Chevedden et al. Given the result, you can expect to see more of this form of fix-it proposal next proxy season. 

Source: Corp Fin refuses to allow exclusion of new form of proxy access fix-it proposal – Cooley PubCo

Big corporations are trying to silence their own shareholders – The Washington Post

David H. Webber, professor at the Boston University School of Law, writes about efforts funded by corporations to reduce the number of shareholder proposals. Note that a very small number of these proposals are filed each year, at a very small percentage of companies, and that even a 100 percent vote in favor is almost never binding on management. And yet, somehow advisory votes by shareholders are so terrifying that the snowflakes in the corporate boardroom get the vapors even thinking about them.

Corporate lobbyists at the Business Roundtable — led by JPMorgan Chase chief executive Jamie Dimon — are heralding an effort to sharply limit the ability of investors to have a say in their companies through shareholder proposals. If successful, it will reduce stockholders’ ability to shape the companies they own and hold corporate managers accountable. As with political voting rights, these corporate voter-suppression efforts demonstrate that even the most basic rights need constant vigilance to protect them.Shareholder proposals — governed by the Securities and Exchange Commission — allow shareholders to suggest ideas to be voted on by their peers at the annual meeting. As with voter-suppression tactics generally, the Business Roundtable would not eliminate shareholder proposal rights. Tactically, that would be too crude. Instead, it would interpose a series of technical requirements that would have the same effect as a ban. Most notably, the Roundtable would drastically raise the ownership threshold needed to file a proposal.But shareholder proposals are effectively tools for significant corporate change, akin to ballot initiatives that have played such an important role in American democracy. In recent years, shareholder proposals have called for better assessment and disclosure of climate change risks and for improved diversity in hiring….A recent SEC study shows that New York City’s efforts [to get companies to adopt proxy access provisions] led to a total increase of $10.6 billion in shareholder value at targeted companies…Even when unsuccessful, shareholder proposals can become important mechanisms for registering discontent and helping companies adjust policy…Shareholder proposals mainstreamed diversity as an investment issue, recently pounced on by State Street — a traditional investment house with $2.5 trillion in assets under management — which adopted a new voting policy favoring women board members, symbolically underscored by the company’s commission of the “Fearless Girl” sculpture on Wall Street….None of this is to say that shareholder proposal rules are perfect. Certain revisions might be worth considering. But nothing justifies the stratospheric threshold that Dimon and the Roundtable are backing. Apparently, they’re not interested in protecting shareholders — only in protecting themselves.

Source: Big corporations are trying to silence their own shareholders – The Washington Post

Proxy Access Reaches the Tipping Point: Adopted by Just Over 50% (251) of S&P 500 Companies as of December 31, 2016

Sidley Austin reports:

In just two years, proxy access has become a majority practice among S&P 500 companies, proving again the effectiveness of private ordering by shareholders to enhance their rights.

The firm’s new report on proxy access provides an update on (i) recent shareholder proposals seeking specified revisions to existing proxy access provisions (so-called “fix-it” proposals), including a new appendix summarizing revisions sought by fix-it proposals, corresponding voting results, company responses and SEC Staff no-action determinations, (ii) the first attempt to utilize proxy access at a U.S. public company — which was promptly withdrawn, (iii) new questions relating to proxy access that ISS will consider for purposes of its newly updated QualityScore corporate governance ratings tool and (iv) other recent developments in the area.

Finally, this report includes an updated appendix which highlights, on a company-by-company basis, the various detailed terms of proxy access provisions adopted by 342 companies in 2015 and 2016, including the terms adopted by 79 additional companies since our September 2016 report.

Source: Proxy Access Reaches the Tipping Point: Adopted by Just Over 50% (251) of S&P 500 Companies as of December 31, 2016 | 12 | 2016 | News | News & Insights | Sidley Austin LLP

GAMCO’s First Use of Proxy Access and “Fix-It” Proposals

First Use of Proxy Access Bylaw

On November 10, 2016, GAMCO Investors, Inc. and its affiliated funds filed a Schedule 14N disclosing their nomination of a proxy access candidate for election to the board of directors of National Fuel Gas Company pursuant to the company’s recently adopted proxy access bylaw.

National Fuel has a nine-member classified board, and its access bylaw has a 3/3/20/20 formulation. GAMCO disclosed in its Schedule 14N aggregate beneficial ownership of 7.8% of National Fuel’s common stock, and based on its Schedule 13D filings, GAMCO has beneficially owned more than 3% for more than three years. In 2015, GAMCO submitted a shareholder proposal, which did not pass, requesting that the company engage an investment bank to effectuate a spin-off of the company’s utility segment.

Source: GAMCO’s First Use of Proxy Access and “Fix-It” Proposals

ExxonMobil Adopts Scott Stringer’s Proxy Access Proposal

Announcement from the NY City Comptroller:

Today, ExxonMobil announced that it will amend its bylaws to adopt proxy access – a cornerstone of Comptroller Scott M. Stringer and the New York City Pension Funds’ strategy to make corporate boards more diverse, independent, and accountable. Proxy access achieves these goals by giving large, long-term shareholders the ability to nominate some of the board’s directors on the company ballot.

The change announced today at ExxonMobil comes in response to a proposal filed by Comptroller Stringer on behalf of the New York City Pension Funds, which received an unprecedented 62% support. The proposal was part of the “Boardroom Accountability Project,” a national campaign launched by Comptroller Stringer to enact proxy access across the marketplace. When the initiative began in 2014, only six companies had meaningful proxy access. Today, it exists among more than 280 companies. 

New York City Comptroller Scott M. Stringer released the following statement on Exxon’s decision: “By enacting proxy access and giving investors a meaningful voice in board elections, Exxon has taken a significant step to empower shareowners. With the historic Paris Agreement taking effect this week, it’s more important than ever that Exxon – and every energy firm – have a diverse, independent, and climate-competent board. As these companies navigate the transition to a low-carbon economy, proxy access gives investors a critical tool to hold directors accountable.”

Source: Statement from New York City Comptroller Scott M. Stringer on ExxonMobil’s Proxy Access Announcement