The Manhattan Institute for Policy Research’s Center for Legal Policy, a conservative, market-orientated think tank, launched a new proxy monitoring resource earlier this week: ProxyMonitor.org. A searchable database of shareholder proposals submitted to the 100 largest U.S. companies over the past three years. You can sort through the data by company, industry, proponent and proposal type.
Even though the data set is a bit limited at this point (the Center intends to expand it over time), the site is straightforward and aggregates some pretty useful proxy information, providing quick insight into shareholder proposal tends, plus it allows you to easily dig deeper. For example, in three mouse clicks you can see that there were 32 shareholder proposals on executive compensation submitted to companies in the health care industry between 2008 and 2010:
The table columns are sortable, you can export the data into a spreadsheet, which I think is a wonderful and often overlooked option, and there’s a link to take you straight to the company filing or you can just print the proposal:
ProxyMonitor definitely makes for a useful resource for anyone interested in shareholder proposals, and will become more so over time as data is added, especially if the Securities and Exchange Commission prevails in its current battle for proxy access.
Last week the U.S. Chamber of Commerce and the Business Roundtable announced the filing of a joint lawsuit challenging the Securities and Exchange Commission’s adoption of proxy access Rule 14a-11. The groups also filed a motion requesting that the Commission stay the effect of the Rule pending resolution of the suit.
Today the Commission did just that; staying not only the effect of Rule 14a-11, but also of the amendments to Rule 14a-8. The groups’ motion didn’t actually request a stay of the effect of the amendments to Rule 14a-8, but the Commission reasoned that the amendments, “designed to complement” Rule 14a-11, were so “intertwined” that allowing them to become effective while staying Rule 14a-11 could potentially be confusing.
At this point the Commission and the groups will file a joint motion with the U.S. Court of Appeals for the District of Columbia Circuit requesting an expedited review of the suit. However, as reported by Bloomberg, the Commission doesn’t expect the suit to be resolved until “late spring”. So, even if the Commission prevails, it now looks like the new proxy access rules will not affect most issuers before the 2012 proxy season.
Yesterday the U.S. Chamber of Commerce and the Business Roundtable announced the filing of a joint lawsuit challenging the Securities and Exchange Commission’s adoption of proxy access Rule 14a-11 as, among other things, arbitrary and capricious and in excess of the Commission’s authority. In a joint press release, members of the Chamber of Commerce assert that:
The SEC’s proxy access rule empowers unions and other special interests at the expense of the vast majority of retail shareholders … [and] will give small groups of special interest activist investors significant leverage over a business’ activities. … The SEC failed to engage in evidence-based rulemaking, and we intend to hold the SEC to its statutory obligation to conduct a thorough cost-benefit analysis.
The groups also filed a motion requesting that the Commission stay Rule 14a-11, including its November 15, 2010 effective date, pending resolution of the suit. The Commission has until October 5, 2010 to respond, but in a preliminary statement, as reported by Bloomberg News, a spokesman for the Commission stated that:
We believe that the commission’s proxy-access rules are both lawful and in the best interests of the public and shareholders. The commission will, of course, carefully consider and timely respond to the motion for a stay.
So, unless and until the Commission or the Court of Appeals stays the effective date, if you mailed your proxy materials out on or after March 15, 2010 you should continue to anticipate Rule 14a-11 affecting your 2011 proxy season. Also of note, the motion is not seeking a stay of the amendments to Rule 14a-8 so, regardless of its outcome, those amendments will be effective on November 15, 2010.
The Securities and Exchange Commission’s new proxy access rule was published in the Federal Register today. The rule is effective on November 15, 2010 for all companies except smaller reporting companies, which have a three-year deferral. That means if you mailed your proxy materials out on or before March 14, 2010, the 2011 window for shareholder submissions will have already lapsed by the November 15, 2010 effective date (with November 14, 2010 being the 120th calendar day before the one year anniversary of a March 14, 2010 mailing date) and the rule will not effect you until the 2012 proxy season. If you mailed your proxy materials out on or after March 15, 2010 the rule will affect your 2011 proxy season (although for companies that mailed their proxy materials out between March 15, 2010 and April 12, 2010, the 2011 window for shareholder submissions will vary in length between 1 and 29 days, rather than the full 30 days prescribed in the new rule).
Yesterday the Securities and Exchange Commission adopted Exchange Act Rule 14a-11, a new proxy access rule requiring public companies to include the director nominees of certain shareholders in their proxy materials.
The new rule is effective for all companies except smaller reporting companies 60 days after its publication in the federal register. The rule is effective for smaller reporting companies after a three year deferral period. The rule does not effect foreign private issuers, which are exempt from the Exchange Act proxy rules altogether.
Under the new rule a company is required to include a shareholder’s director nominee in its proxy materials if the nominating shareholder:
- owns a minimum of 3% of the total voting power of the company’s securities (groups of shareholders can aggregate their shares to meet this minimum threshold);
- has held the minimum number of shares for at least three years;
- certifies that they will continue to hold the minimum number of shares through the date of the shareholder meeting; and
- certifies that they are not holding the shares for purposes of effecting a change in control or to gain a number of board seats in excess of the maximum permitted under the rule.
A nominating shareholder must provide notice to the Commission and the company of their director nominees between 150 and 120 days before the date on which the company’s proxy materials were mailed the year before. To be eligible, a shareholder nominee must meet the requirements of applicable federal, state and foreign laws and the national securities exchange or association rules.
The new rule also limits the number of shareholder nominees to the greater of one nominee or up to 25% of the total number of board seats. If more shareholder nominees are put forth than seats are available, only the nominees of the shareholder or shareholder group with the largest percentage of qualifying voting power must be included in the company’s proxy materials.
The Commission also amended Exchange Act Rule 14a-8(i)(8) to allow shareholders to propose amendments to a company’s governing documents that would establish procedures for the inclusion of shareholder director nominees in the company’s proxy materials.
The Commission’s full adopting release (all 451 pages) is available here.