By Che Odom
Jan. 12 — In what promises to be another busy year for proxy access, the New York City Pension Funds announced that they have filed access resolutions at 72 companies.
In a Jan. 11 release, New York City Comptroller Scott Stringer said he is targeting 36 new companies this year that, among other problems, are “board diversity laggards” or have “excessive CEO pay.”
In addition, Stringer said he submitted resolutions at 36 companies that he targeted last year because they have yet to enact or agree to enact “viable” bylaws, or have “unworkable bylaws.”
Meanwhile, the California Public Employees' Retirement System also is gearing up to submit access resolutions, according to Todd Mattley, investment officer at CalPERS's global governance team.
“We think 2015 was very successful for the first year of a widespread proxy access campaign,” Mattley told Bloomberg BNA in an interview Jan. 12. “We expect this positive momentum to continue in 2016.”
Under proxy access, shareholders are allowed to nominate directors and have their nominees included in the company's annual meeting proxy materials.
According to Bloomberg BNA data, 115 companies adopted proxy access in 2015, and the New York City Comptroller's office and CalPERS are two of the cause's largest proponents. In fact, Stringer jumpstarted the mechanism in the 2015 season when he submitted resolutions to 75 companies as part of the Board Accountability Project (29 CCW 362, 11/26/14).
Attempts to reach officials from Stringer's office were not successful.
Meanwhile, Mattley told Bloomberg BNA that proxy access is a strategic priority for CalPERS, and “in principle we would advocate this provision at all of our portfolio companies.”
“For CalPERS, board quality—specifically diversity, independence and competence—are critical areas of focus,” Mattley continued. “Where there are areas of concern, proxy access will help ensure corporate boards remain accountable to shareowners.”
Mattley said CalPERS expects to file the same kinds of proposals this year that it filed in 2014, pushing for an eligibility threshold of 3 percent stock ownership for three years.
“What we are finding is companies are getting more comfortable with these thresholds,” he said, adding that engagements with companies involve working through the “finer points on how to implement a shareholder-friendly bylaw provision.”
As proxy access remains key in 2016, engaging with shareholders—whether they be the New York City Comptroller, CalPERS or the Vanguard Group—is a must for companies, Yafit Cohn, of counsel in the New York office of Simpson Thacher & Bartlett LLP, told Bloomberg BNA in a Jan. 12 e-mail.
“As is the case with all other governance changes, it is critical that publicly traded companies engage with their shareholders to understand their views and take those views into account when making decisions on how to proceed with regard to proxy access,” said Cohn, whose practice focuses on corporate governance and compliance matters. “What the Comptroller's Office deems ‘unworkable' may be precisely what a particular issuer's shareholders are looking for.”
Companies should expect shareholders to be focused on the number of director nominees allowed, the number of stockholders who can aggregate to form a nominating group and whether loaned shares should be counted toward the ownership threshold, among other issues, she said.
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