Category: Shareholder Activism

Observations and Recommendations on the SEC’s Recent Process Changes for Excluding Shareholder Proposals

Exchange Act Reporting and Disclosure Effectiveness / Investor Relations and Communications / Proxy Statements and Annual Meetings / SEC Rulemaking / Shareholder Activism

16 Sep, 2019

Observations and Recommendations on the SEC’s Recent Process Changes for Excluding Shareholder Proposals

Overview Earlier this month, the SEC’s Division of Corporation Finance announced that its staff may respond orally instead of in writing to some shareholder proposal no-action requests, beginning with the 2019-2020 proxy season. Furthermore, the staff may now more frequently decline to state a view on the no-action request, whereas in the past, it had typically concurred or disagreed with a company’s asserted basis for...

2019 Proxy Season Update: Shareholder Proposal Trends

Environmental, Social and Governance Matters / Exchange Act Reporting and Disclosure Effectiveness / Investor Relations and Communications / Proxy Statements and Annual Meetings / SEC Rulemaking / Shareholder Activism

8 May, 2019

2019 Proxy Season Update: Shareholder Proposal Trends

In the United States, the process by which shareholders submit proposals to be voted on at a company’s annual meeting has long been a mechanism used to promote often obscure special interests and social issues. In recent years, however, as environmental, social and governance (ESG) topics have become more mainstream, the market has seen a surge in this type of proposal. In 2018, Russell 3000...

Johnson & Johnson May Exclude Shareholder Proposal for Binding Arbitration on Securities Claims

Corporate Governance Committees, Policies and Practices / Exchange Act Reporting and Disclosure Effectiveness / Proxy Statements and Annual Meetings / Shareholder Activism

12 Feb, 2019

Johnson & Johnson May Exclude Shareholder Proposal for Binding Arbitration on Securities Claims

On February 11, 2019, the Staff of the Division of Corporation Finance granted no-action relief permitting Johnson & Johnson to omit a shareholder proposal from its proxy statement. The shareholder proposal requested mandatory arbitration of shareholder claims arising under the federal securities laws. The Staff relied on Rule 14a-8(i)(2), which permits exclusion of a proposal that, if implemented, would cause the company to violate any...

SEC Withdraws No Action Letters on Proxy Advisory Firms

Corporate Governance Committees, Policies and Practices / Investor Relations and Communications / Other categories / Proxy Statements and Annual Meetings / SEC Rulemaking / Shareholder Activism

13 Sep, 2018

SEC Withdraws No Action Letters on Proxy Advisory Firms

In order to facilitate discussion on the role of proxy advisory firms at the upcoming Roundtable on the Proxy Process, which is scheduled for November 2018, the SEC staff has determined to withdraw two no action letters that provided comfort to investment advisers in relying on proxy advisory firm recommendations: In Egan-Jones Proxy Services (May 27, 2004), the staff had confirmed that by voting based on the...

Board Governance and Compensation / Proxy Statements and Annual Meetings / Shareholder Activism

27 Jun, 2017

Proxy Access “Fix-It” Proposals Fizzle

As the 2017 proxy season winds down, one clear take-away is that shareholder proposals attempting to modify the terms of previously adopted mainstream proxy access bylaws did not fare well. Many of these proposals focused solely on the aggregation limit, seeking to increase the number of shareholders (usually 20) that are required to meet the minimum ownership threshold (usually 3% of outstanding shares) in order...

Shareholder Proposals Restricting Board/Management Access to Preliminary Voting Results May Be Excluded

Investor Relations and Communications / Proxy Statements and Annual Meetings / SEC Rulemaking / Shareholder Activism

13 Jan, 2017

Shareholder Proposals Restricting Board/Management Access to Preliminary Voting Results May Be Excluded

On January 6, 2017, the SEC Staff granted no-action relief that would allow companies to exclude shareholder proposals preventing management or the board from accessing preliminary voting results on uncontested matters prior to the annual meeting, including a running tally of votes for and against, and using that information to solicit votes. See, The Boeing Company, Ferro Corporation, Honeywell International Inc., L-3 Communications Holdings, Inc.,...

Board Governance and Compensation / Proxy Statements and Annual Meetings / Shareholder Activism

2 Dec, 2016

Recent Developments in Proxy Access

As the 2017 proxy season begins to unfold, proxy access continues to be a focus of shareholder proposals. Last year, companies that had already adopted mainstream proxy access bylaws, or that were planning to put mainstream proxy access bylaws up for a shareholder vote, were largely successful in being able to exclude shareholder proposals to adopt proxy access bylaws on the grounds that such proposals...

Proxy Statements and Annual Meetings / Shareholder Activism

16 Nov, 2016

First U.S. Proxy Access Nominee

On November 10, 2016, GAMCO Asset Management filed a Schedule 13D/A and 14N announcing that it had used the proxy access bylaw at National Fuel Gas to nominate a director candidate for election to NFG’s board at the upcoming 2017 annual meeting of shareholders. This nomination appears to be the first use of proxy access bylaws by a shareholder to nominate a director in the...

SEC Proposes Universal Ballots in Contested Elections

Proxy Statements and Annual Meetings / SEC Rulemaking / Shareholder Activism

1 Nov, 2016

SEC Proposes Universal Ballots in Contested Elections

On October 26, 2016, in a split vote, the SEC proposed the mandated use of universal ballots in contested director elections at annual meetings. The proposed rules were controversial even before they were proposed – the House of Representatives approved a spending bill this summer that included a provision prohibiting the SEC from proposing or implementing the use of the universal ballots in contested elections....

2016 Proxy Season Review: Shareholder Proposals

Proxy Statements and Annual Meetings / Shareholder Activism

12 Jul, 2016

2016 Proxy Season Review: Shareholder Proposals

With most of the 2016 proxy season in the rear-view mirror, it’s clear that shareholder proposals continue to be a preferred vehicle for certain kinds of shareholder activism, though with limited effectiveness unless the company and the shareholder reach a negotiated outcome. Proxy access proved to be the notable exception. Overall, the total number of shareholder proposals submitted (916) was down from the all-time high...

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