What a difference three years can make! In 2010 proxy access was the hot issue in corporate governance circles: investors and legal practitioners eagerly awaited the outcome of the SEC’s rulemaking on that subject, and carefully watched the ultimately successful legal challenge to the rules that were promulgated. And even when those rules were largely invalidated, there was rampant speculation about the prospect of the use of private ordering to adopt proxy access bylaws through shareholder proposals under revised Rule 14a-8.
Just three years later, however, the world seems to have passed proxy access by. Suggestions that a low frequency of access proposals in 2012 would be followed by increasing attention to the topic in 2013 didn’t pan out: in fact, there were even fewer proxy access shareholder proposals in 2013 than in 2012 – a total of ten, if my count is right, compared to twelve in 2012.
So I present the 2013 statistics here without great enthusiasm or expectation of intense interest on anyone’s part. In part, that’s because there’s a much more comprehensive, nicely searchable resource for the outcomes of votes on shareholder proposals, prepared by Proxy Monitor, sponsored by the Manhattan Institute’s Center for Legal Policy. And those folks spare you any editorial comment, thanks.
And with so little data to work with, there’s not much profound to say about the results of the voting on 2013’s proxy access proposal. As in 2012, though, proposals that call for much more liberal proxy access than the 3%/3 year formula adopted by the SEC don’t do very well: with one exception, they didn’t achieve over 20% of even the votes cast, let alone of shares present or outstanding; most received below 10%; and the only proposal of this sort that did at all “well” was at Staples, where a 1%/1 year proposal garnered 33% of the votes cast.
Not surprisingly, sponsorship by management tends to help, a lot: with management support at HP and Chesapeake Energy, proxy access bylaws received support of over 97% of the votes cast. At Chesapeake, however, even that level of support wasn’t enough: the proposal required approval by two-thirds of the outstanding shares, and only 60% of the outstanding shares supported the measure.
The “success” stories for proxy access this year were at Verizon and CenturyLink, where precatory 3%/3-year proposals received a majority of the votes cast (although less than a majority of the shares outstanding). Whether and how the boards of directors of those companies respond to these votes remains to be seen. Also unknown at this point is when, if ever, any shareholder will actually use proxy access rights once a bylaw is adopted (as occurred at HP (Section 2.2(h) of its bylaws) and Western Union (Article II, Section 8(c) of its bylaws as of May 30, 2013).