This post describes the results produced so far during the 2013 proxy season as a result of the work that the Shareholder Rights Project (SRP) has done on behalf of SRP-represented clients. Thus far, this work has already resulted in the following 2013 outcomes:

• 19 boards of S&P 500 and Fortune 500 companies declassified following the adoption of agreed-upon management proposals at 2013 annual meetings; and
• 13 precatory proposals passed at the 2013 annual meetings of S&P 500 and Fortune 500 companies, with an average support of 78%.

Further details about these results (including lists of all the relevant S&P 500 and Fortune 500 companies) are provided below. We note that these results add to those obtained during 2012 in which the work of the SRP and SRP-represented investors resulted in:

…continue reading: SRP Mid-Proxy-Season Results: 19 Boards Declassified, 13 Precatory Declassification Proposals Passed

As a result of the work of the Shareholder Rights Project (SRP) and SRP-represented investors, declassification proposals will be voted on in April and May 2013 at the annual meetings of 36 S&P 500 and Fortune 500 companies:

• At 28 companies, agreed-upon management proposals to declassify will be brought to a shareholder vote of approval pursuant to agreements entered into with SRP-represented investors;
• At 8 companies, where such agreements have not been reached, precatory proposals that the SRP has submitted on behalf of SRP-represented investors will go to a vote.

These 36 proposals are in addition to 9 proposals that already went to a vote and were approved at annual meetings of S&P 500 and Fortune 500 companies in 2013 (3 management proposals and 6 precatory proposals), as well as the many additional declassification proposals (both agreed-upon management proposals and precatory proposals) that will go to a vote at subsequent annual meetings.

…continue reading: 36 Declassification Proposals Going to a Vote in April and May

In its news alert released yesterday, the Shareholder Rights Project (SRP), working on behalf of eight SRP-represented investors, announced that proposals submitted for 2013 meetings have already had significant impact. As discussed below, major results obtained so far include the following:

• Following active engagement, 46 S&P 500 and Fortune 500 companies that received shareholder proposals for 2013 annual meetings have already agreed to move towards annual elections.
• These 46 companies represent more than 60% of the companies receiving shareholder proposals from SRP-represented investors for the 2013 proxy season.
• Together with the 2012 work of the SRP, 91 companies — about three-quarters of the S&P 500 and Fortune 500 companies that received proposals in 2012, 2013 or both — have agreed to move towards annual elections. The aggregate market capitalization of these 91 companies exceeded one trillion dollars as of March 1, 2013.

…continue reading: Substantial 2013 Results Already Produced by SRP and SRP-Represented Investors

The State Board of Administration (SBA) sponsored an executive compensation research study by Farient Advisors LLC, covering 1,800 companies, 24 Industry groups, and fourteen years of data (from 1998-2011). The research project identifies the primary metrics used in executive compensation plans, overall and by industry, company size, and valuation premiums, and then tests these metrics to determine whether the metrics being used have the highest impact on total stock returns.

The study provides the most definitive answer to date on a critical question—are companies choosing their long-term incentive metrics wisely for the most sustainable benefit to shareowners?

…continue reading: Performance Metrics and Their Link to Value

In its 2012 Annual Report released today, and in joint press releases issued today with institutional investors it represents, the Shareholder Rights Project (SRP) provided detailed information about the outcomes of its work with SRP-represented investors during 2012, the SRP’s first full year of operations.

As discussed below, major results obtained during 2012 include the following (for complete details on all outcomes see the Annual Report):

• 48 S&P 500 companies (listed here) entering into agreements to move toward declassification;
• 38 successful precatory proposals (listed here), with average support of 82% of votes cast;
• Over 60% of successful precatory proposals by public pension funds and over 30% of all successful precatory proposals; and
• 42 board declassifications (listed here), reducing the number of classified boards among S&P 500 companies by one-third.

Expected Impact by End of 2013: As a result of these outcomes and the ongoing work of the SRP and SRP-represented investors, it is estimated that a majority of the 126 S&P 500 companies that had classified boards at the beginning of 2012 will have moved toward annual elections by the end of 2013.

…continue reading: Large-Scale Governance Reforms in S&P 500 Companies

In joint press releases issued earlier this week, the Shareholder Rights Project (SRP) and each of eight institutional investors it represents announced their collaboration for the 2013 proxy season to encourage 74 S&P 500 and Fortune 500 public companies to move to annual elections. The SRP has submitted shareholder proposals on behalf of the eight SRP-represented investors for a vote at the 2013 annual meetings of 74 S&P 500 and Fortune 500 companies. A list of the 74 companies that received proposals is available here. The proposals urge repeal of the companies’ staggered boards and a move to annual elections.

The SRP and SRP-represented investors have already begun to engage with companies receiving shareholder declassification proposals, and some of the companies receiving shareholder proposals have already agreed to take steps necessary to declassify their boards. It is expected that, as occurred during the 2012 proxy season, the engagement by the SRP and SRP-represented investors will result in negotiated outcomes and moves to annual elections at a large proportion of the 74 companies receiving proposals.

…continue reading: Advancing Board Declassification in the 2013 Proxy Season

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

Fiscal year 2011 witnessed the SBA’s shift from domestic and foreign asset classes, to a combined global equity portfolio, with a heavier international equity weighting and a more balanced U.S. exposure. With the recent structural changes, the proportion of SBA assets invested in foreign equity markets will continue to rise, and a significant proportion may be managed internally. In 1998, for foreign equities was 7.6 percent, rising to 12.7 percent by 2003, and 18.8 percent by the end of fiscal year 2010. Upon completion of the transition to a combined global equity asset class, foreign equities composed 33 percent of FRS assets as of October 2011. As a percent of the equity asset class, foreign shares account for 56 percent and U.S. shares for 44 percent.

Coinciding with this shift, the SBA realigned its international proxy voting practices, bringing foreign voting decisions ”in-house” to match domestic SBA voting practices.

Previously, external asset managers were responsible for voting international proxies associated with SBA shares held in their funds. Since the SBA assumed this responsibility, votes are now cast by SBA staff—based on our own Corporate Governance Principles & Proxy Voting Guidelines and meeting specific research from our proxy research providers.

…continue reading: Analyzing Global Proxy Voting Practices

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