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By Yin Wilczek
Feb. 11 — General Electric Co. Feb. 11 said it has amended its bylaws to allow proxy access.
In a Form 8-K filing, the company said its new bylaw—which took effect Feb. 6—allows a shareholder or a group of up to 20 shareholders that own 3 percent or more of stock for at least three years to nominate and include in the company's proxy materials directors constituting up to 20 percent of the board.
John Olson, a Washington-based partner at Gibson Dunn & Crutcher LLP, told Bloomberg BNA that GE's move might persuade other companies to consider proxy access.
“GE has long been a thought leader among major American corporations on corporate governance issues, so I think this will encourage other corporate boards to focus on the issue, even if they have not already had a proxy access shareholder proposal,” Olson said.
In the latest developments, two companies that received proxy access resolutions from the New York City Comptroller's office—CF Industries Holdings Inc. and HCP Inc.—announced in recent Forms 8-K that they have adopted bylaws with more stringent requirements than advocated by the office.
One of GE's board members is Mary Schapiro, a former chairman of the Securities and Exchange Commission who fought to push through a federal proxy access rule. However, the U.S. Court of Appeals for the District of Columbia vacated the SEC's rule in July 2011 on the basis on inadequate economic analysis.
Proxy access has gained new attention in the 2015 season because of resolutions submitted at numerous companies by shareholder proponents, including James McRitchie and New York City Comptroller Scott Stringer.
Shareholders generally favor the three percent/three years eligibility threshold.
A move by some companies to counter shareholder access proposals with management resolutions with stricter eligibility requirements led the SEC to shut down the no-action relief process under 1934 Securities Exchange Act Rule 14a-8(i)(9) while the staff reviews the exclusion.
Meanwhile, McRitchie told BBNA that GE's new bylaw is “a good sign.” However, he suggested that if he were a GE shareholder, he still would consider filing a proxy access proposal without the 20-shareholder limit and allowing nominations for up to 25 percent of the board.
“I would also expect to get support” for the resolution to pass, he said.
Earlier this year, Monsanto Co. announced that its shareowners approved a nonbinding shareholder-submitted access proposal.
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GE's filing is available at http://www.sec.gov/Archives/edgar/data/40545/000004054515000012/0000040545-15-000012-index.htm.
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