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June 27 — An increasing number of companies negotiating settlements with shareholders led to a material decrease in the number of shareholder proposals seeking proxy access in 2016, a new report said.
Proxy access allows shareholders to nominate their own board candidates on the company's ballot.
During the 2016 proxy season as of June 10, a total of 25 shareholder proposals seeking proxy access were introduced, about a 35 percent decrease from the 2015 full proxy season level of 39 resolutions, according to a June 23 report published by the Manhattan Institute for Policy Research. Twelve of the 25 proposals from the 2016 season received majority shareholder approval.
A key reason for the decrease was New York City Comptroller Scott Stringer's success in negotiating for proxy access at several companies. While Stringer in 2016 targeted dozens of companies with proxy access campaigns (82 CARE, 4/28/16), he ultimately withdrew many of those proposals once his target agreed to accommodate his push for the director-nomination mechanism, resulting in fewer shareholder resolutions on the topic.
“In 2016, an increasing number of companies recognized the broad and diverse investor support for meaningful proxy access bylaws. This year, we were able to negotiate settlements at a substantial majority of companies where the City funds filed resolutions,” Stringer said in a June 27 statement sent to Bloomberg BNA.
“Proxy access is now the market standard and we expect more corporations to proactively adopt bylaws on their own in the coming years,” Stringer said.
The report said shareholder proposals seeking proxy access are the most likely to gain majority support this season, which is winding down and will largely be over by June 30.
In 2014, Stringer's office, the fiduciary to New York City public pension funds, launched a proxy access initiative and began seeking through shareholder proposals proxy access at companies whose shares are owned by the pension funds. In the 2015 season, Stringer targeted about 75 companies and in the 2016 proxy season he targeted about 72 companies, Manhattan Institute senior fellow James Copland told Bloomberg BNA.
While many corporate boards may not support proxy access, they also realize shareholder awareness regarding the issue is increasing and thus companies are more willing to accommodate shareholder requests on the matter, Copland said.
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The report is available at http://www.proxymonitor.org/Forms/2016Finding1.aspx .
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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