Posts Tagged ‘Proxy access’

Some Thoughts for Boards of Directors in 2015

Editor’s Note: Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is based on a Wachtell Lipton memorandum by Mr. Lipton, Stephen A. Rosenblum, and Karessa L. Cain.

The challenges that directors of public companies face in carrying out their duties continue to grow. The end goal remains the same, to oversee the successful, profitable and sustainable operations of their companies. But the pressures that confront directors, from activism and short-termism, to ongoing shifts in governance, to global risks and competition, are many. A few weeks ago we issued an updated list of key issues that boards will be expected to deal with in the coming year (accessible at this link: The Spotlight on Boards, and discussed on the Forum here). Highlighted below are a few of the more significant issues and trends that we believe directors should bear in mind as they consider their companies’ priorities and objectives and seek to meet their companies’ goals.

…continue reading: Some Thoughts for Boards of Directors in 2015

The Next Wave of Proxy Access Proposals

Posted by Yaron Nili, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday November 24, 2014 at 9:14 am
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Editor’s Note: The following post comes to us from David J. Berger, partner focusing on corporate governance at Wilson Sonsini Goodrich & Rosati, and is based on a WSGR Alert memorandum.

The Comptroller of the City of New York, who oversees pension funds with a combined $160 billion in assets, recently submitted proxy access shareholder proposals at 75 U.S. public companies as part of its Boardroom Accountability Project. [1] These 75 companies, representing a wide range of industries and market capitalizations, were targeted based on three “priority issues”: climate change, board diversity, and executive compensation.

“Proxy access” proposals seek to provide shareholders with a mechanism for placing their nominees for director in a company’s proxy statement and on its proxy card, thereby avoiding the cost to a shareholder of sending out its own proxy statement. Under a typical proxy access bylaw, shareholders must hold a specified amount of stock in the company (e.g., 3 percent) for a certain period (e.g., 3 years), in addition to meeting other procedural requirements. Proponents of proxy access argue that it provides shareholders with a cost-effective means of running their own candidates for director, providing all shareholders with greater ability to shape the composition of the board.

…continue reading: The Next Wave of Proxy Access Proposals

Proxy Access Proposals for the 2015 Proxy Season

Posted by David A. Katz, Wachtell, Lipton, Rosen & Katz, on Friday November 7, 2014 at 5:04 pm
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Editor’s Note: David A. Katz is a partner at Wachtell, Lipton, Rosen & Katz specializing in the areas of mergers and acquisitions, corporate governance, and complex securities transactions. This post is based on a Wachtell Lipton memorandum. Work from the Program on Corporate Governance about proxy access includes Private Ordering and the Proxy Access Debate by Lucian Bebchuk and Scott Hirst (discussed on the Forum here).

A number of U.S. companies have recently received “proxy access” shareholder proposals submitted under SEC Rule 14a-8. Many of the recipients have been targeted under the New York City Comptroller’s new “2015 Boardroom Accountability Project,” which is seeking to install proxy access at 75 U.S. publicly traded companies reflecting diverse industries and market capitalizations. Underlying the Comptroller’s selection of targets is a stated focus on climate change, board diversity and executive compensation.

…continue reading: Proxy Access Proposals for the 2015 Proxy Season

2014 Corporate Governance Review

Posted by Yaron Nili, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday October 30, 2014 at 8:54 am
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Editor’s Note: The following post comes to us from Rajeev Kumar, a senior managing director of research at Georgeson Inc, and is based on the executive summary of a Georgeson report; the full report is available here.

Shareholder activism continued to thrive in the 2014 proxy season, spurring corporate action as well as renewed engagement between issuers and investors. While the total number of shareholder proposals declined in 2014, lively activity continued with calls for independent chairs as well as burgeoning growth for social issues. And while few in number, change-in-control payout proposals were notably successful for the first time this year, while equity retention proposals continued to have a weak showing. In addition, support for proxy access proposals also grew at a rate greater than any other type of proposal.

…continue reading: 2014 Corporate Governance Review

Proxy Access in the US

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday October 22, 2014 at 9:02 am
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Editor’s Note: The following post comes to us from Matt Orsagh, director at CFA Institute, and is based on the summary of a CFA publication, titled Proxy Access in the United States: Revisiting the Proposed SEC Rule; the complete publication is available here.

In this summary of CFA Institute findings, we take a brief look at the history of proxy access, discuss the pertinent academic studies, examine the benefits and limits of cost–benefit analysis, analyze the use of proxy access in non-US jurisdictions, and draw some conclusions.

How We Got Here

Proxy access refers to the ability of shareowners to place their nominees for director on a company’s proxy ballot. This right is available in many markets, though not in the United States. Supporters of proxy access argue that it increases the accountability of corporate boards by allowing shareowners to nominate a limited number of board directors. Afraid that special-interest groups could hijack the process, opponents of proxy access are also concerned about its cost and are not convinced that proxy access would improve either company or board performance.

…continue reading: Proxy Access in the US

The Recent Evolution of Shareholder Activism

Editor’s Note: Matteo Tonello is vice president at The Conference Board. This post relates to a report released jointly by The Conference Board and FactSet, authored by Dr. Tonello and Melissa Aguilar of The Conference Board. The Executive Summary is available here (the document is free but registration is required). For details regarding how to obtain a copy of the full report, contact matteo.tonello@conference-board.org.

Proxy Voting Analytics (2010-2014), a report recently released by The Conference Board in collaboration with FactSet, reviews the last five years of shareholder activism and proxy voting at Russell 3000 and S&P 500 companies.

Data analyzed in the report includes:
…continue reading: The Recent Evolution of Shareholder Activism

Boardroom Confidentiality Under Focus

Editor’s Note: David A. Katz is a partner at Wachtell, Lipton, Rosen & Katz specializing in the areas of mergers and acquisitions and complex securities transactions. This post is based on an article by Mr. Katz and Laura A. McIntosh that first appeared in the New York Law Journal; the full article, including footnotes, is available here.

In our Age of Communication, confidential information is more easily exposed than ever before. Real-time communication tools and social media give everyone with Internet access the ability to publicize information widely, and confidential information is always at risk of inadvertent or intentional exposure. The current cultural emphasis on transparency and disclosure—punctuated by headline news of high-profile leakers and whistleblowers, and exacerbated in the corporate context by aggressive activist shareholders and their director nominees—has contributed to an atmosphere in which sensitive corporate information is increasingly difficult to protect. There is limited statutory or case law to guide boards and directors in this area, and there exists a range of opinions among market participants and media commentators as to whether leaking information (other than illegal insider tipping) is problematic at all.

…continue reading: Boardroom Confidentiality Under Focus

2013 Annual Corporate Governance Review

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday November 12, 2013 at 9:22 am
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Editor’s Note: The following post comes to us from David Drake, President of Georgeson Inc., and is based on the Executive Summary of a Georgeson report. The complete publication is available here.

For many years, the proactive engagement of shareholders on corporate governance matters has been limited to just a handful of companies. However, over the past few years companies have shown a greater willingness to engage, particularly after the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) made advisory votes on executive compensation (commonly referred to as “say-on-pay”) a mandatory voting item for most publicly traded U.S. companies. Last year we reported on the explosive growth in the level of engagement between public companies and investors on corporate governance matters, with both sides lauding the benefits of such engagement. Investors’ proxy departments have reported the benefits of gaining an early understanding of the issues a company is facing and the rationale behind decisions the company made beyond what is disclosed in the proxy statement. Meanwhile, issuers have found value in gaining firsthand knowledge of the nuances of investors’ proxy voting guidelines.

Given that both sides have seen the benefits of such an exchange, there has again been a significant rise in the number of engagement programs initiated by companies this year. As one would expect, there were a variety of reasons that companies sought to engage in outreach campaigns. While most companies engaged in order to improve on their past voting results, many others have aimed to establish a dialogue in order to maintain positive results. The scope of programs also tended to vary with many being quite expansive. These included lengthy off-season engagements with institutions, multiple contacts with the same institution during the year, in-person visits with investors and inclusion of members of the board of directors in the discussion. Some companies went so far as to proactively reach out to their top 100, 150 and even 200 institutional investors.

…continue reading: 2013 Annual Corporate Governance Review

Preparing for the 2014 Proxy and Annual Reporting Season

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday October 14, 2013 at 9:14 am
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Editor’s Note: The following post comes to us from Laura Richman, counsel at Mayer Brown LLP, and is based on a Mayer Brown Legal Update.

While the proxy and annual reporting season for calendar year public companies typically heats up in the winter, by autumn preparations for the 2014 season should be underway. The following key issues for the upcoming season are discussed below:

  • Current Say-on-Pay Considerations
  • Say-When-on-Pay
  • Compensation Committee Independence and Compensation Consultants
  • NYSE Quorum Requirement Change
  • Pending Dodd-Frank Regulation
  • Proxy Access
  • Specialized Disclosures
  • SEC Interpretations Impacting Reporting
  • Iran Sanctions Disclosure
  • XBRL
  • PCAOB Audit Committee Communications Requirements
  • Director and Officer Questionnaires
  • E-proxy

…continue reading: Preparing for the 2014 Proxy and Annual Reporting Season

Key Issues From the 2013 Proxy Season

Editor’s Note: The following post comes to us from Ted Wallace, Senior Vice President in the Proxy Solicitation Group at Alliance Advisors LLC, and is based on an Alliance Advisors newsletter by Shirley Westcott. The full text, including tables and footnotes, is available here.

During this year’s annual meeting season, issuers experienced better outcomes on say on pay (SOP) and shareholder resolutions, underpinned by a high degree of engagement and responsiveness to past votes. With SOP in its third year, companies addressed many of investors’ and proxy advisors’ pivotal compensation concerns, which was reflected in a modest improvement in average SOP support and proportionately fewer failed votes.

Similarly, although the volume of shareholder resolutions on ballots was nearly comparable to the first half of 2012, average support declined across many categories and there were 27% fewer majority votes (See Table 1). This was due in large part to corporate actions on resolutions that are traditionally high vote-getters, such as board declassification, adoption of majority voting in director elections, and the repeal of supermajority voting provisions, resulting in the withdrawal or omission of the shareholder proposal. Indeed, issuers made a conscious effort to avoid the prospect of majority votes, mindful of potential fallout against directors by proxy advisory firms. Beginning in 2014, ISS will oppose board members who fail to adequately address shareholder resolutions that are approved by a majority of votes cast in the prior year, while Glass Lewis is scrutinizing board responses to those that receive as little as 25% support (see our January newsletter).

…continue reading: Key Issues From the 2013 Proxy Season

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