With the current proxy season moving toward its final stage, this post provides an updated report about the outcome of precatory declassification proposals that investors represented by the Shareholder Rights Project (SRP) submitted to S&P 500 companies. At this stage of the proxy season, thirty-three precatory declassification proposals submitted to S&P 500 companies by SRP-represented investors won approval, with an average support of 82% of votes cast. These results, as well as the proposals still expected to go to a vote at other S&P 500 companies this season, are described further below.
As described in detail on the SRP’s website, during the 2011-12 proxy season, the SRP has been representing and advising several institutional investors – including the Illinois State Board of Investment (ISBI), the Los Angeles County Employees Retirement Association (LACERA), the Nathan Cummings Foundation (NCF), the North Carolina State Treasurer (NCDST), and the Ohio Public Employees Retirement System (OPERS) – in connection with the submission of precatory shareholder proposals to more than eighty S&P 500 companies that have classified boards. The proposals urge repealing the classified board and moving to annual elections, which are widely viewed as corporate governance best practice.
Through active engagement with companies receiving declassification proposals, forty-four S&P 500 companies have entered into agreements committing them to bring management proposals to declassify their boards (information about these negotiated outcomes is available here). In many of the companies receiving proposals, however, negotiated outcomes were not forthcoming, and as a result, shareholder proposals submitted by the SRP-represented investors have been going to a vote at a number of annual meetings. In particular, such proposals have already gone to a vote at thirty-five companies.
Of the thirty-five proposals voted on so far, thirty-three passed. The table below provides information concerning the precatory declassification proposals that passed. As the table indicates, these proposals obtained average support of 82.16% of votes cast.
Of the thirty-five shareholder proposals to declassify that went to a vote, only two proposals (detailed here) did not pass. Although these proposals failed to gain majority support, they received an average support of 48.55% of votes cast.
We hope that all or most of the thirty-three companies where declassification proposals passed will follow the strongly expressed preferences of their shareholders and bring management proposals to declassify to a vote at their 2013 annual meeting.
|Company||Proponent||% of Votes
Cast in Favor
|Apache Corporation (APA)||ISBI||89.00%|
|Baxter International Inc. (BAX)||NCF||98.07%|
|Bemis Company (BMS)||NCDST||74.75%|
|CF Industries Holdings, Inc. (CF)||LACERA||92.71%|
|Cerner Corporation (CERN)||ISBI||64.93%|
|Chipotle Mexican Grill, Inc. (CMG)||ISBI||89.38%|
|Cognizant Technology Solutions Corporation (CTSH)||LACERA||91.13%|
|DENTSPLY International Inc. (XRAY)||LACERA||78.36%|
|EQT Corporation (EQT)||OPERS||80.98%|
|Edwards Lifesciences Corporation (EW)||ISBI||97.59%|
|F5 Networks, Inc. (FFIV)||ISBI||77.20%|
|FLIR Systems, Inc. (FLIR)||NCF||81.94%|
|FMC Corporation (FMC)||NCF||82.65%|
|Hess Corporation (HES)||NCDST||77.55%|
|Lexmark International, Inc. (LXK)||NCDST||92.82%|
|Limited Brands, Inc. (LTD)||ISBI||64.54%|
|Lorillard, Inc. (LO)||ISBI||96.35%|
|MEMC Electronic Materials, Inc. (WFR)||NCDST||95.54%|
|Masco Corporation (MAS)||ISBI||84.52%|
|Moody’s Corporation (MCO)||NCF||76.94%|
|Netflix, Inc. (NFLX)||LACERA||74.66%|
|People’s United Financial, Inc. (PBCT)||NCDST||90.61%|
|QEP Resources, Inc. (QEP)||ISBI||87.92%|
|Quest Diagnostics Incorporated (DGX)||ISBI||93.50%|
|Ryder System, Inc. (R)||NCDST||87.67%|
|SCANA Corporation (SCG)||NCDST||60.28%|
|salesforce.com, inc. (CRM)||NCF||80.52%|
|Snap-On Incorporated (SNA)||NCDST||84.87%|
|US Steel Corporation (X)||NCDST||82.48%|
|Urban Outfitters, Inc. (URBN)||ISBI||59.99%|
|V.F. Corporation (VFC)||NCF||62.74%|
|Vornado Realty Trust (VNO)||ISBI||85.61%|
|Vulcan Materials Company (VMC)||ISBI||73.45%|