United States Proxy Exchange has published a model proxy access proposal under revised SEC Rule 14a-8. I am struck by the fact that it’s precatory, not mandatory: even though Delaware law (DGCL Section 112) clearly permits stockholders to adopt such a bylaw themselves, the USPE model only calls for a vote to recommend that someone else — namely, the board of directors — do the deed that the stockholders could do for themselves.
Can someone tell me why an organization whose motto (“Populus Constituit”) means “the people decide” (“people” presumably meaning stockholders) is apparently so reluctant to actually let “the people decide?”
I have a suspicion about the reason: USPE is probably savvy enough to think that a mandatory bylaw proposal won’t get nearly as high a vote as a diluted, precatory proposal. But if that’s the case, however, won’t it be reasonable for boards of directors not to take even a majority vote on a precatory proposal seriously, in the belief that if real bullets had been at stake the stockholders themselves wouldn’t have voted for it? Why the reluctance to actually find out how stockholders would vote on whether to use the powers that they clearly have under state law?