Stay current on changes and developments in corporate law with a wide variety of resources and tools.
Nov. 25 — National Fuel Gas Co. (NFG) has rejected Gamco Asset Management Inc.'s board nominee, saying the shareholder isn’t eligible to use the company’s proxy access director-nomination process.
Gamco, which owns a 7.8 percent stake in NFG, earlier this month became the first investor ever to use proxy access when it nominated Lance Bakrow to the nine-member board of the Williamsville, N.Y.-based natural gas company. Bakrow is a former Goldman Sachs partner who co-founded Greenwich Energy Solutions.
NFG, in a Nov. 23 letter filed with the Securities and Exchange Commission, said its board concluded that Gamco’s notice didn’t comply with the company’s bylaws because the investor acquired its shares with the intent to change or influence the company and “continues to have the intent.”
Proxy access is a mechanism that allows shareholders to nominate their board candidates on corporate ballots. NFG in March adopted a bylaw that allows shareholders who have held at least 3 percent of its shares for three years or longer to nominate up to 20 percent of the board.
NFG Director of Corporate Communications Karen Merkel told Bloomberg BNA in an e-mail that the company doesn’t plan on including Bakrow in the proxy materials for its 2017 annual meeting. The company’s proxy access procedures “are limited for use by an investor who wants to nominate a board candidate but has not advocated and is not advocating to change or influence control of the Company,” she said. “GAMCO’s historical and current intent to change or influence control of the Company disqualifies them from submitting a candidate under the By-Laws.”
In 2015, NFG shareholders rejected a Gamco-backed proposal for the company to spin off its utility business.
A Gamco representative wasn’t immediately available for comment.
The NFG developments show that companies, not surprisingly, will adhere to the terms of their proxy access bylaws, Yafit Cohn, an associate based in Simpson Thacher & Bartlett LLP’s New York office, told Bloomberg BNA.
Cohn, who comments frequently on corporate governance matters, said it is common in corporate proxy access provisions to preclude shareholders that have shown an intention to influence control of the company. Activist investors that have disclosed plans or proposals involving “an extraordinary corporate transaction, a sale or transfer of a material amount of assets of the issuer or one of its subsidiaries, or otherwise” likely will be barred by the provisions from using proxy access as a tool to achieve their goals, she said.
Corporate governance attorneys previously told Bloomberg BNA that the Gamco proxy access nomination was being closely watched.
While about 300 companies have adopted proxy access bylaws since 2015, shareholder and corporate representatives have said the mechanism is unlikely to be frequently used. It also remains unclear whether the mechanism will prove effective in shareholders’ bid to gain board seats.
To contact the reporter on this story: Michael Greene in Washington at mGreene@bna.com
To contact the editor responsible for this story: Yin Wilczek at firstname.lastname@example.org
National Fuel Gas’s letter is available at https://www.sec.gov/Archives/edgar/data/70145/000119312516776709/d296488dex99.htm.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)