Progress on Proxy Access

In a milestone event, ExxonMobil’s shareholders recently approved relatively progressive proxy access board provisions.

Proxy access provisions enable shareholders of a public company to submit director nominees and measures into the corporation’s annual shareholder proxy to be voted on by all shareholders.

The battle to obtain proxy access has been long and contentious (click here for my 2012 post, “Just a Small Leak”).

For an introduction to proxy access, click here for an article by the Council of Institutional Investors.

Excerpt

“Proxy access” is shorthand for a crucial mechanism that gives shareowners a meaningful voice in corporate board elections. It refers to the right of shareowners to place their nominees for director on a company’s proxy card. This lets investors avoid the cost of sending out their own proxy cards when they are dissatisfied with a corporate board and want to run their own candidates for director.

 CII believes that proxy access would invigorate board elections and make boards more responsive to shareowners and more vigilant in their oversight of companies.

What makes the ExxonMobil vote so momentous is the percentage of the vote in favor and the fact that this vote was tinged with climate change controversy, not just good corporate governance (Click here).

Excerpt

The so-called proxy access measure was the first Exxon shareholder proposal since 2006 to be approved, and it was the only one of 11 proposals related to climate change to pass at meetings held Wednesday by Exxon and fellow U.S. oil giant Chevron Corp.

More than 60 percent of Exxon shareholders backed proxy access, which was narrowly defeated last year.

Perhaps this issue has reached a tipping point as ExxonMobil shareholders got a letter recommending acceptance by two of the largest US institutional shareholders, California’s CALPERS and the Comptroller of the City of New York representing NYC’s pension funds (click to read).

We’ll monitor developments on proxy access and report important milestones.

Please contact me to discuss your capital market goals for raising capital and M&A.

SEC Rethinks Proxy Access Rules

In a surprising action mid-January, the SEC reversed a decision issued in December of last year on what’s known as proxy access rules.

Proxy access rules define who can and how to submit proposals to public companies for inclusion in the company’s proxy statement. They also describe under what circumstances companies can exclude those shareholder proposals which is the specific issue in the SEC decision reversal.

The battle over these rules has been raging for several years as illustrated by my earlier article on this subject (click here).

Corporations and their counsels had declared victory when they defeated an SEC proposal which would have created clear conditions requiring companies to include shareholder proposals in their proxies. This left companies with great discretion over whether to include shareholder proposals.

To further protect companies, many requested “no-action letters” from the SEC indicating that the SEC wouldn’t challenge the company’s decision on its treatment of the specific shareholder proxy submissions.

This was the status quo until last week (January 15) when the SEC withdrew its “no-action letter” issued to Whole Foods and announced that the SEC was re-evaluating its position on proxy access rules and related “no-action letters”.

The SEC has come under increasing criticism for its inaction on the topic since the defeat of its proposal (see article link above). With shareholder activism gaining greater mainstream acceptance, large institutional investors, including the New York City Comptroller’s Office, which oversees funds with $160 billion in assets, have lobbied the SEC to support greater shareholder influence in proxy content.

The decision to reverse the issuance of the Whole Foods “no-action letter” doesn’t indicate how the SEC will decide on the issue of proxy access rules. The SEC has announced, simply, that it is evaluating its position. Companies rightly fear, however, that it may signal that the current environment favorable to companies may change.

The New York Times “Dealbook” has a good article on this topic (click here).

Sheppard Mullin, the law firm, also issued a good article (click here).

A couple public companies have excluded shareholder provisions despite withdrawal of no-action letters by the SEC (click here) for article by Stinson Leonard Street, the law firm.

Proxy Season 2015 Prep

The beginning of the new year signals that it’s time to think about your 2015 proxy.

The last several years have witnessed interesting developments in the topics and trends of proxies and annual meetings.

While distinct but related, shareholder activism has increased, bolstered by several notable victories last year such as Yum! Brands and Bob Evans Farms.

Fortunately for us, Latham & Watkins, the law firm, provides valuable information about the topics and trends for proxy preparation to help us prepare.

Latham & Watkins is offering a free webinar on preparing for the 2015 proxy season (click here – registration required) and provides a useful write-up on proxy supplements (click here).

Please stay tuned for more developments as we move into the new proxy season.

 

 

SEC’s Proxy Advisory Guidance Reinforces Current Rules

The SEC’s recently issued guidance regarding investment advisor’s responsibilities in proxy voting and the role of proxy advisory firms disappointed some companies and legal professionals for failing to reign in proxy advisory firms.

Proxy advisory firms have been steadily gaining influence among institutional investors which threatens companies’ longstanding advantage (see my posts – Proxy Advisors’s Success Draws Attention, Silent Majority Speaks and Herding Cats).

The SEC’s guidance reiterated the current rules, not changing them.

The trend, raising proxy advisory firms’ influence in corporate proxy issues, therefore, is likely to continue.

Click on the links below for the SEC Guidance and an article in the online magazine “FierceCFO”.

Click here to go to the SEC Guidance article.

Click here to go to the online magazine “FierceCFO” article.

Proxy Season Recap 2014

There are valuable lessons to be learned from the 2014 proxy season.

Georgeson, the proxy solicitor, and Latham & Watkins, the law firm, have produced a valuable webinar to efficiently inform us of “takeaways” and trends from the proxy season.

LogoGeoLatham

Click here to go to the webcast

Topics

• Executive Compensation Developments, including updates on this year’s Say on Pay votes, proxy injunction and other executive compensation lawsuits, ISS and Glass Lewis practices and SEC rules

• Evolving Trends in Shareholder-Investor Engagement, including newly recommended protocols and differing investor approaches for making a difference over the long term

• Issues of Increasing Concern to Investors, including director qualifications, tenure and board structure; environment and social issues; and the hottest shareholder proposals

• Activist Investors, including preparing for and responding to their latest playbooks

Speakers
Jim Barrall, Partner, Latham & Watkins LLP
Rhonda Brauer, Senior Managing Director – Corporate Governance, Georgeson
Steven Stokdyk, Partner, Latham & Watkins LLP

Sponsors

Latham & Watkins LLP is a leading global law firm dedicated to working with clients to help them achieve their business goals and overcome legal challenges anywhere in the world. The firm has earned considerable market recognition based on a record of landmark matters and a unified culture of innovation and collaboration. From a global platform of offices covering the world’s major financial, business and regulatory centers, the firm’s lawyers help clients succeed. For more information, visit www.lw.com.

Georgeson is the world’s leading provider of strategic proxy and corporate governance advisory services to corporations and shareholder groups working to influence corporate strategy. For over half a century, Georgeson has specialized in complex solicitations such as hostile and friendly acquisitions, proxy contests and takeover defenses. The firm also provides issuers with expertise in corporate events solutions such as post-merger unexchanged holder programs and information agent services. For more information, visit www.georgeson.com.

 

Questions
michele.bravo@lw.com |
+1.213.892.3054

Preparing for the 2014 Proxy Season

While it may seem early to be preparing for the 2014 proxy season, my colleagues at Latham & Watkins, the law firm, and Georgeson, the proxy solicitor, hosted a webinar on that topic recently

Below, you’ll find the description of the webinar and a link to the registration page.

Link to registration page.

Corporate Governance Webcasts: A Complimentary Series2014 Proxy Season: Strategically Preparing for Your Fall and Winter
Program

The fall is a critical period for US public companies and their management and directors to become educated and organized for the 2014 Proxy Season.During this 60-minute program, Latham & Watkins and Georgeson join together again to provide recommendations on the pro-active steps companies should consider taking during this period in order to prepare for the 2014 Proxy Season. Topics that will be covered include:

  • Say-on-Pay Advance Preparation: lessons learned in the first three say-on-pay vote seasons; engagement with key institutional investors regarding executive compensation policies; preparation for compensation committee deliberations; dealing with new policies from the proxy advisory firms and more compensation proposals from shareholders; the impact of the new NYSE and Nasdaq listing standards on Compensation Committee advisor independence.
  • Proxy Season Advance Preparation: constructive engagement with key institutional investors and the proxy advisory firms to identify and seek early resolution of corporate governance issues; consideration of proposed SEC rulemaking; and potential proxy season litigation.
  • Advance Preparation for other hot button shareholder proposals such as political contributions and lobbying, board declassification, independent chairmen, proxy access, environmental, social and other governance issues.
 
Registration
Click here to register online.
Don’t miss out on our upcoming programs:

  • January 15, 2014 – Drafting Your Proxy Statement and Preparations for a Successful Annual Meeting
  • June 18, 2014 – Lessons Learned and Coming Attractions

 

Invitation to follow closer to the program date. To ensure that you receive an invitation, please opt-in to our Webcast Mailing List by clicking here.

 Speakers

Jim Barrall, Partner, Latham & Watkins

Steven Stokdyk, Partner, Latham & Watkins

Rhonda Brauer, Senior Managing Director, Corporate Governance, Georgeson

 

Questions

For more information and questions about this event, please contact: Michele Bravo

Sponsors

Latham & Watkins is a leading global law firm dedicated to working with clients to help them achieve their business goals and overcome legal challenges anywhere in the world. The firm has earned considerable market recognition based on a record of landmark matters and a unified culture of innovation and collaboration. From a global platform of offices covering the world’s major financial, business and regulatory centers, the firm’s lawyers help clients succeed. For more information, visit www.lw.com.

Georgeson is the world’s foremost provider of strategic shareholder consulting services to corporations and shareholder groups working to influence corporate strategy. We offer unsurpassed advice and representation in annual meetings, mergers and acquisitions, proxy contests and other extraordinary transactions. In global transactions, our capacity and network is unmatchedOur core proxy expertise is enhanced with and complemented by our strategic consulting services, as well as by the Georgeson inVU™ platform, a software tool that provides insight into investor ownership and voting profiles. For more information, visit www.georgeson.com.

 

Dealing with Greater Shareholder Activistism

Trends suggest that companies, large and small, will encounter greater shareholder activism over the next years and should, therefore, prepare for this.

Skadden, Arps, Slate, Meagher & Flom LLP prepared a valuable article describing the forces at work to support greater activism and certain preparatory actions that companies should undertake.

Click here to take you to the article, or copy and paste the following link in your browser:

http://www.jdsupra.com/legalnews/activist-shareholders-in-the-us-a-ch-83602/

 

Proxy Season 2013 Recap and Alert

Latham & Watkins, the law firm, and Georgeson, the proxy solicitor, have teamed up again to recap the significant events of the 2013 proxy season.  I attended this webinar and, as usual, it was high quality with great information and insights.  The link to the replay is below.

Click here (registration required).

 

 

On-Demand Now Available

 

2013 Proxy Season:
Lessons Learned and Coming Attractions

 

 

 

Program

In this program, halfway through the 2013 proxy season for the Russell 300 companies, Latham & Watkins’ Jim Barrall, Mark Gerstein and Steven Stokdyk, and Georgeson’s  Rhonda Brauer review the 2013 proxy season, including Say on Pay voting results and battleground issues, the impact of executive compensation lawsuits, the positive results of shareholder engagement, increasing shareholder activism, share ownership and voting developments, and look ahead to the prospects for the remainder of the 2013 proxy season, as well as discuss coming attractions on the horizon for the 2014 season. 

Questions

For more information and questions about this webcast, please contact Michele Bravo at michele.bravo@lw.com or +1.213.892.3054.

 

 

To Access the Program

Click here to access the on-demand webcast.

 

You will automatically be directed to the lobby page to launch the webcast.

 

 

Fight or Settle – “Say on Pay” Suits

By Dennis McCarthy – (213) 222-8260 – dennis@mbsecurities.com – 

If public company executives didn’t already have enough to deal with, now there’s one more item.

Corporate Counsel magazine reports a significant rise in lawsuits by plaintiff’s attorneys claiming inadequate disclosure in company’s “say on pay” proxy disclosure.

These “say on pay” lawsuits are filed by the same law firms which show up filing suit claiming M&A proxy disclosure is inadequate.

These suits also follow the pattern of M&A litigation in which plaintiffs seek an injunction to prevent a shareholder vote.

To date, most companies have chosen to settle these “say on pay” suits requiring the companies to revise their proxy materials plus pay several hundred thousand dollars to plaintiff’s attorneys.

So far, the absolute number of these “say on pay” lawsuits is small but unless companies choose to fight them, I suspect the number will grow.

I’ve attached a link to the Corporate Counsel magazine article which itself has links to several helpful sources.

As always, please contact me to help your company with any capital market transaction.

Link to the article or paste this:

http://www.law.com/corporatecounsel/PubArticleCC.jsp?id=1202590630080

My friend and colleague, Roger Zickfeld at Columbia Capital sent me an additional article from CFO Magazine which provides more color on the topic (Link)

Katten Muchin Rosenman also prepared a valuable background slide deck (link).  


Google

2013 Proxy Season Prep

Dennis McCarthy – (213) 222-8260 – dennismccarthy@ariesmgmt.com

It may seem early, but now’s the time to get prepared for the upcoming 2013 proxy season.

Last year’s proxy season was notable for greater shareholder activism as I discuss in my posts (Just a Small Leak, Silent Majority Speaks and Initial Results). 

I suggested this trend was fostered by the rise of proxy advisors in my video (Herding Cats) and would continue.

So, in preparing for the 2013 proxy season, small cap company executives and their boards of directors can gain valuable insights about this season’s key issues by listening to a webinar produced by the law firm, Latham & Watkins, and proxy solicitor, Georgeson.

This webinar covers many issues including proxy access (Potential Trojan Horse), “say on pay”, political spending and several more topics. 

It’s definitely worth the time.  It’s packed with information.  I highly recommend that you click on the link below.

I also encourage you to contact me to help your company to complete any capital market transactions.

Webinar link – registration required: https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=548640&sessionid=1&key=137765EF6ECD99F2943DB8481BBA1B39&sourcepage=register 

Jan 24 addition – link to sign up for executive compensation consulting firm, Equilar, webinar series to prep for 2013 proxy season:

http://info.equilar.com/2013OutlookWebinarSeries_page.html?mkt_tok=3RkMMJWWfF9wsRoiuajIZKXonjHpfsX57ekkWae0lMI%2F0ER3fOvrPUfGjI4CT8pkI%2FqLAzICFpZo2FFdC%2FWccIFS

Jan 30 addition – For those of you who would like to see the quantitative data on the trends in proxy issues and proxy voting, I have two links, one to an article from the magazine, Corporate Counsel, which alerted me to survey data prepared by the Conference Board, which has its own link below.

Corporate Counsel Article Link: http://www.law.com/corporatecounsel/PubArticleCC.jsp?id=1202586196247&=&Analysis_of_Proxy_Voting_Data_Looks_at_SayOnPay_Shareholder_Engagement=&et=editorial&bu=Corporate%20Counsel&cn=cc20130130&src=EMC-Email&pt=Corporate%20Counsel%20Daily%20Alerts&kw=read%20more%20%C2%BB&slreturn=20130030132043

Conference Board Survey Link: http://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2402