The effects of say on pay on shareholder engagement, the introduction of proxy access proposals, and the resurgence of board declassification resolutions were the principal themes of the last proxy season and are expected to continue to take center stage in 2013, according to a report issued today by The Conference Board in collaboration with FactSet Research Systems Inc.

Proxy Voting Analytics (2008-2012) analyzes data on voting by shareholders of U.S. companies that held their annual general meetings (AGMs) in the January 1-June 30 period during the last five years. Aggregate data on shareholder proposals, management proposals, and proxy contests is examined and segmented based on market index (whether the Russell 3000 or the S&P 500) and 20 business industry groups.

The report is supplemented with an appendix offering detailed recommendations from Conference Board experts for companies facing situations of shareholder activism.

Data analyzed in the report includes:

…continue reading: Proxy Voting Analytics (2008-2012)

This post provides a final tally of the results from the work of the American Corporate Governance Institute (ACGI) during 2011. As described in more detail below, this final tally shows that the 2011 work of the ACGI and ACGI-represented investors contributed to board declassification at 21 S&P 500 companies – about 15% of the S&P 500 companies that had a staggered board as of the beginning of 2011. [1]

During the 2011 proxy season, the ACGI worked on behalf of two institutional investors — the Florida State Board of Administration (SBA) and the Nathan Cummings Foundation (NCF) — in connection with the submission of shareholder declassification proposals for presentation at the 2011 annual meetings of certain S&P 500 companies. The ACGI assisted the SBA and the NCF with selecting companies for proposal submission, designing proposals, engaging with companies, negotiating and executing agreements by companies to bring management declassification proposals, and presenting proposals at annual meetings.

…continue reading: Contributing to the Declassification of 21 S&P 500 Companies: Final Tally of the Results of the ACGI’s 2011 Work

In a joint media release, available here, the SRP and the Massachusetts Pension Reserves Investment Management Board (PRIM) recently announced their collaboration to encourage a significant number of public companies to consider moving to annual elections.

PRIM is charged with the general supervision of the Pension Reserves Investment Trust (PRIT) Fund, with pension assets exceeding $49 billion. PRIM, on behalf of the PRIT Fund, has submitted shareholder declassification proposals for 2012 and 2013 annual meetings to twenty companies with staggered boards, and the SRP is representing and advising PRIM and the PRIT Fund in connection with these proposals. The proposals urge a repeal of the companies’ classified board structures and a move to annual elections, which are widely viewed as corporate governance best practice.

…continue reading: Massachusetts Pension Reserves Investment Management Board and the Shareholder Rights Project Collaborate

The declassification of the board of directors is emerging as one of the key highlights of the 2012 proxy season, as shareholder proposals on the subject continue to receive overwhelming support. This and other data from nearly 500 annual general meetings (AGMs) held at Russell 3000 companies in the January 1-April 30 period are discussed in the new edition of Proxy Voting Fact Sheet—the periodic report issued by The Conference Board in collaboration with FactSet Research.

In classified boards, members are divided into classes with directors in each class serving staggered terms (typically three years) so that only one class stands for election each year. Classification is used as a defensive measure to prevent hostile takeovers: when a board is staggered, hostile bidders must win more than one proxy contest at successive shareholder meetings to exercise control of the target. Proposals on declassification seek to discontinue this board structure in favor of a system of annual election for all members. The Fact Sheet reports that across the 17 proposals on declassification that went to a vote in the first four months of the year, the average support level was 75.9 percent of votes cast. The most notable examples included the 85.2 percent approval at Johnson Control, a 78.7 percent vote at F5 Networks, and the 77.2 percent vote at Emerson Electric.

…continue reading: Proxy Voting Fact Sheet

This post provides an updated overview of the outcomes resulting from the work by the American Corporate Governance Institute (ACGI) during the 2011 proxy season to contribute to moving S&P 500 companies toward board declassification. During the 2011 proxy season the ACGI represented and advised two institutional investors, the Florida State Board of Administration (SBA) and the Nathan Cummings Foundation (NCF), in connection with the submission of shareholder declassification proposals. In addition to the results described in an earlier post, we were pleased by subsequent developments in two companies:

• Thermo Fisher Scientific Inc. (TMO): Following a vote at the 2011 annual meeting in which 87% of the shareholder votes cast were in favor of the SBA’s declassification proposal, the board of directors amended the company’s bylaws to declassify the board. Starting at the 2012 annual meeting, directors will be elected for one year terms, with the entire board serving one-year terms from the 2014 annual meeting.
• eBay Inc. (EBAY): Following the submission of a proposal by the NCF, negotiations between eBay (represented by Wachtell Lipton) and the NCF (represented by the ACGI) produced an agreement pursuant to which the company committed to complete a full review of declassifying the board of directors and moving to annual elections of all directors. Following the completion of the review, the company announced that it will bring a management proposal to declassify the board for a vote at the 2012 annual meeting.

With these developments, the ACGI’s work during the single 2011 proxy season has contributed to (i) eight companies which have already declassified, (ii) seven companies which have already committed to bring a management declassification proposal at their 2012 meeting, and (iii) eight companies which have yet to respond to the substantial shareholder majority votes in support of declassification at their 2011 annual meetings, as described below.

…continue reading: Moving S&P 500 Companies Toward Board Declassification: Post-Proxy Season Update from the ACGI

This post provides a summary of work to declassify corporate boards done during the 2010-11 proxy season by the American Corporate Governance Institute (ACGI). This work contributed to moving 22 S&P 500 companies toward board declassification, which could result in as much as a 15% reduction in the incidence of board classification among S&P 500 companies from the beginning of the 2010-11 proxy season.

During the 2010-2011 proxy season, the ACGI worked with two institutional investors, the Florida State Board of Administration (SBA) and the Nathan Cummings Foundation (NCF), on the submission of shareholder declassification proposals. The ACGI assisted these institutional investors with designing and drafting proposals, selecting companies for submission of proposals, communicating with the Securities and Exchange Commission with respect to no-action requests, engaging with companies to reach negotiated outcomes, and, when such negotiations were not successful, presenting proposals at shareholder meetings.

This work on behalf of the SBA and the NCF during this proxy season resulted in: (i) seven S&P 500 companies passing charter amendments to declassify their boards; (ii) six S&P 500 companies committing to submit management declassification proposals for shareholder approval at their 2012 shareholder meeting; and (iii) passage of shareholder declassification proposals, with average support of 82.2% of votes cast, at nine S&P 500 companies at which SBA and NCF proposals were voted on. We provide further details of each of these results below.

Charter Amendments to Declassify in Seven Companies

Following the submission of proposals, the ACGI assisted the SBA and NCF in negotiating and reaching agreements pursuant to which management agreed to bring charter amendments to declassify their boards of directors to a vote of shareholders. In addition, following the submission of one of the proposals (to Watson Pharmaceuticals, Inc.), the company announced a plan to bring a declassification proposal to a vote at its 2011 annual meeting. Altogether, the ACGI’s work contributed to the passage of seven charter amendments to declassify the boards of directors of S&P 500 companies. Those companies, with the percentage of votes cast and the percentage of outstanding shares supporting the declassification amendment, were as follows:

…continue reading: Moving Twenty-Two S&P 500 Companies towards Board Declassification