Posts Tagged ‘Shareholder Rights Project’

75% of 2014 Engagements Have Already Produced Agreements to Declassify

Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project (SRP), Scott Hirst is the SRP’s Associate Director, and June Rhee is a counsel at the SRP. The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University. The work of the SRP has been discussed in other posts on the Forum available here.

In a news alert released last week, the Shareholder Rights Project (SRP), working with SRP-represented investors, announced the high level of company responsiveness to engagements during the 2014 proxy season. In particular, as discussed in more detail below, major results obtained so far include the following:

  • Following active engagement, about three-quarters of the S&P 500 and Fortune 500 companies that received declassification proposals for 2014 annual meetings from SRP-represented investors have already entered into agreements to move towards board declassification.
  • This outcome reinforces the SRP’s expectation (announced in a blog post available here) that, by the end of 2014, the work of the SRP and SRP-represented investors will have resulted in about 100 board declassifications by S&P 500 and Fortune 500 companies.

…continue reading: 75% of 2014 Engagements Have Already Produced Agreements to Declassify

Toward Board Declassification in 100 S&P 500 and Fortune 500 Companies: The SRP’s Report for the 2012 and 2013 Proxy Seasons

Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project (SRP), Scott Hirst is the SRP’s Associate Director, and June Rhee is a counsel at the SRP. The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University. The work of the SRP has been discussed in other posts on the Forum available here.

The Shareholder Rights Project (SRP) just released its final report for the 2012 and 2013 proxy seasons, the SRP’s first two years year of operations. As the report details, major results obtained include the following:

  • 100 S&P 500 and Fortune 500 companies (listed here) entered into agreements to move toward declassification;
  • 81 S&P 500 and Fortune 500 companies (listed here) declassified their boards; these companies have aggregate market capitalization exceeding one trillion dollars, and represent about two-thirds of the companies with which engagement took place;
  • 58 successful declassification proposals (listed here), with average support of 81% of votes cast; and
  • Proposals by SRP-represented investors represented over 50% of all successful precatory proposals by public pension funds and over 20% of all successful precatory proposals by all proponents.

…continue reading: Toward Board Declassification in 100 S&P 500 and Fortune 500 Companies: The SRP’s Report for the 2012 and 2013 Proxy Seasons

Towards Board Declassification at 100 S&P 500 and Fortune 500 Companies: Advancing Annual Elections in the 2014 Proxy Season

Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project (SRP), Scott Hirst is the SRP’s Associate Director, and June Rhee is the SRP’s Counsel. The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University. The work of the SRP has been discussed in other posts on the Forum available here.

In a news alert released last week, the Shareholder Rights Project (SRP) announced the work that SRP-represented investors and the SRP are undertaking for the 2014 proxy season, and the significant contribution that this work is expected to make in moving 100 S&P 500 and Fortune 500 companies towards annual elections.

  • 31 shareholder proposals for board declassification have been submitted to S&P 500 and Fortune 500 companies for a vote at their 2014 annual meetings (listed here);
  • 7 companies—about one quarter of the 31 companies receiving proposals—have already entered into agreements to bring management declassification proposals to a shareholder vote;
  • These 7 companies are in addition to 8 other S&P 500 and Fortune 500 companies that have committed to bring agreed-upon management proposals to a vote in future annual meetings following 2012 and 2013 precatory proposals by SRP-represented investors;
  • The 15 agreed-upon management proposals to declassify, coupled with board declassifications that have already taken place at 80 S&P 500 and Fortune 500 companies as a result of the work by the SRP and SRP-represented investors (listed here), can be expected to contribute to the wide-scale move toward annual elections; and
  • The agreements already obtained following the submission of 2014 proposals, and the ongoing engagements by the SRP and SRP-represented investors with companies receiving 2014 proposals that have not yet entered into such agreements, reinforce the SRP’s expectation that, as a result of the work by the SRP and SRP-represented investors, close to 100 S&P 500 and Fortune 500 companies will have moved toward board declassification by the end of 2014.

…continue reading: Towards Board Declassification at 100 S&P 500 and Fortune 500 Companies: Advancing Annual Elections in the 2014 Proxy Season

Towards Board Declassification in One-Hundred S&P 500 and Fortune 500 Companies

Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project (SRP), Scott Hirst is the SRP’s Associate Director, and June Rhee is the SRP’s Counsel. The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University. The work of the SRP has been discussed in other posts on the Forum available here.

In a news alert released yesterday, the Shareholder Rights Project (SRP), working on behalf of SRP-represented investors, announced the substantial results of the work by the SRP and SRP-represented investors during 2012 and in 2013, the SRP’s first two years year of operations. (The results reported below reflect 2013 outcomes through the end of October 2013.)

As discussed in more detail below, major results obtained include the following (for full details on all outcomes see the SRP’s preliminary 2012-2013 Report released yesterday):

  • 99 S&P 500 and Fortune 500 companies (see more details here) have entered into agreements to move toward declassification;
  • 79 S&P 500 and Fortune 500 companies (listed here) have declassified their boards; these companies have aggregate market capitalization exceeding one trillion dollars, and represent about two-thirds of the companies with which engagement took place;
  • 58 successful declassification proposals (listed here), with average support of 81% of votes cast; and
  • Proposals by SRP-represented investors represented over 50% of all successful precatory proposals by public pension funds and over 20% of all successful precatory proposals by any proponents.

Expected Impact by End of 2014: As a result of these outcomes and the ongoing work of the SRP and SRP-represented investors, it is estimated that, by the end of 2013, the work of the SRP and SRP-represented investors will have resulted in:

  • Close to 100 board declassifications by S&P 500 and Fortune 500 companies;
  • Declassification of the boards of over 60% of the S&P 500 companies that had classified boards as of the beginning of 2012; and
  • A decrease in the incidence of classified boards among S&P 500 companies to less than 10%.

Below are further details about these substantial results:

…continue reading: Towards Board Declassification in One-Hundred S&P 500 and Fortune 500 Companies

2013 Proxy Season: A Turning Tide in Corporate Governance?

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday August 23, 2013 at 9:34 am
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Editor’s Note: The following post comes to us from Robert A. Profusek, partner focusing on mergers and acquisitions at Jones Day, and is based on a Jones Day publication by Mr. Profusek, Lyle G. Ganske, and Lizanne Thomas.

The 2013 proxy season has ended, and many public companies are in a period of relative calm on the governance front before the season for shareholder proposal submissions begins in a few months. This post reflects on some of the highlights of the past proxy season and a few events and trends that may shape the 2014 season.

Declining Influence of Proxy Advisory Firms

Events in the 2013 proxy season have signaled that the era of blind adherence to proxy advisory firms’ recommendations may be waning, at least to some degree. JPMorganChase’s success in defeating a highly contested independent board chair proposal for the second year in a row provides some evidence that the influence of proxy advisory firms is decreasing, at least as to non-core governance issues outside the executive compensation area. The JPMorganChase shareholder proposal won the support of only 32.2 percent of the votes cast at its 2013 annual meeting, despite Glass Lewis’s and ISS’s recommendations in favor of the proposal. A Wall Street Journal article relating to the vote even included this gem of a quote from a VP of proxy research at Glass Lewis: “Our power is probably shrinking a bit.” Would that it were so—investors’ reclaiming the power of the shareholder franchise would be good news for corporations and their boards, and for investors as well.

…continue reading: 2013 Proxy Season: A Turning Tide in Corporate Governance?

The Shareholder Rights Project’s Mid-Year Update

Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project (SRP), Scott Hirst is the SRP’s Associate Director, and June Rhee is the SRP’s Counsel. The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University. The work of the SRP has been discussed in other posts on the Forum available here.

In a news alert released yesterday, the Shareholder Rights Project (SRP), working on behalf of eight SRP-represented investors, announced the substantial results of the work by the SRP and SRP-represented investors during the first six months of 2013, as well as the aggregate impact of their work during 2012 and 2013.

Produced Large-Scale Reforms: As a result of the work of the SRP and SRP-represented investors, 77 S&P 500 and Fortune 500 companies declassified their boards of directors during 2012 or the first half of 2013. The companies that declassified:

…continue reading: The Shareholder Rights Project’s Mid-Year Update

The New York Times on the Shareholder Rights Project

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday July 8, 2013 at 10:17 am
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The New York Times published on Sunday an article on the work of the Shareholder Rights Project (SRP). The article, entitled New Momentum for Change in Corporate Board Elections, was written by New York Times columnist Gretchen Morgenson.

Based on a review of the SRP’s results and interviews with the SRP’s clients and the Director of the SRP, the article discusses the benefits produced by the SRP’s work. The article begins with the observation that “shareholder efforts that actually succeed in changing dubious corporate governance policies are so rare that when they happen, it makes you sit up and take notice;” and concludes that “[c]learly, the shareholder project is having a positive effect.” The article expresses the hope that “mutual funds would join this bandwagon or construct their own,” and suggests that “[t]he Shareholder Rights Project is a model they might want to emulate.”

The SRP is a clinical program operating at Harvard Law School. The SRP works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance.

The New York Times article stresses that the work of the SRP and its clients during the 2012 and 2013 proxy seasons has produced a large number of board declassifications at large publicly traded firms, moving these companies to annual elections for directors. The article further notes that “[a] far better approach for holding directors accountable, according to a significant body of academic research, is to make them stand for election annually.”

…continue reading: The New York Times on the Shareholder Rights Project

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

Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project (SRP), Scott Hirst is the SRP’s Associate Director, and June Rhee is Counsel at the SRP. The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University. The work of the SRP has been discussed in other posts on the Forum available here.

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

Wachtell Lipton Was Wrong About the Shareholder Rights Project

Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project(SRP). The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University.

This post responds to four memoranda issued by Wachtell Lipton Rosen & Katz, available on the blog here, here, here, and here.

In a memorandum issued recently by the law firm Wachtell, Lipton, Rosen & Katz (WLRK), WLRK co-founder Martin Lipton criticized me for supporting shareholder activism that allegedly has detrimental effects in the long term. The memorandum followed two earlier, strongly-worded WLRK memoranda signed by Lipton and several other prominent corporate partners at the firm, titled “The Shareholder Rights Project is Wrong” and “The Shareholder Rights Project is Still Wrong“. Those memoranda criticized the work of a program I direct, the Shareholder Rights Project (SRP), for destroying long-term value by contributing to numerous board declassifications.

I am currently carrying out research work that addresses the view held by WLRK and others that investor activism is generally detrimental to the long-term interests of companies and their shareholders. In the meantime, however, the SRP’s recent release of its 2013 results provides an appropriate opportunity to respond to WLRK claims that the SRP’s work, in particular, has contributed to the destruction of long-term value. As I explain below, these results indicate that relevant institutional investors and corporate boards have largely rejected WLRK’s views – and require that WLRK reconsider its position.

…continue reading: Wachtell Lipton Was Wrong About the Shareholder Rights Project

A Reply to Professor Bebchuk

Posted by Martin Lipton, Wachtell, Lipton, Rosen & Katz, on Tuesday April 9, 2013 at 8:50 am
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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 a reply to a simultaneously published post by Professor Lucian Bebchuk, which in turn responds to several Wachtell Lipton memoranda. Professor Bebchuk’s post is available here, and the four memoranda to which he responds are available here, here, here, and here.

I respectfully take issue with Professor Bebchuk’s analysis and conclusions. Professor Bebchuk’s empirical evidence consists basically of cherry-picked stock market prices and a unanimous vote in favor of shareholder-centric governance by institutional shareholders. Professor Bebchuk’s hyperbole cannot disguise the fact that his shareholder-centric model promotes short-termism and that it is this short-term focus on capital allocation and other business decisions that has led to the decline of the American economy and greater unemployment. When one attempts to parse his syllogism, it doesn’t hold-together. Apparently, Professor Bebchuk believes that classified boards can’t be bad unless directors are bad, or else they would have all committed ritual suicide rather than ever agree to declassification.

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