It should come as no surprise that, in light of the COVID-19 pandemic, the number of virtual shareholder meetings this proxy season has jumped—off the page. But will this year’s broad experience leave companies wanting more? And will investor groups, which have tended to be skeptical of the virtual-only format, begin to view VSMs more favorably?
The Council of Institutional Investors has announced that it has filed petitions with the NYSE and Nasdaq requesting that each exchange amend its listing standards to address the issue of multi-class capital structures (i.e., share structures that have unequal voting rights for different classes of common stock). As requested by the petition, the amendment would require that, going forward, companies seeking to list with multi-class share structures include provisions in their governing documents that would sunset the unequal voting at seven years following an IPO and return the structure to “one-share, one-vote” structures, “subject to extension by additional terms of no more than seven years each, by vote of a majority of outstanding shares of each share class, voting separately, on a one-share, one-vote basis.” According to CII, unequal voting rights impair the ability of shareholders “to hold executives and directors accountable.” But companies contend that these measures are being adopted for a valid reason: to protect the company from unwanted interventions by hedge-fund activists with short-term goals and perspectives. Accordingly, the debate has centered around whether these measures are a legitimate effort to protect companies from the pressures of short-termism exerted by hedge-fund activists and others or are a mechanism that causes shareholders to cede power without providing accountability. Of course, the answer depends on where you sit.
CII petitions SEC for staff guidance on the proxy rules and an amendment to Item 5.07 of Form 8-K regarding voting results
by Cydney Posner Earlier this month, the Council of Institutional Investors filed a petition with the SEC requesting interpretive guidance regarding the proxy rules and rulemaking in connection with Form 8-K. More specifically, CII requested the following: Staff guidance regarding proxy statement disclosure of voting requirements for items on the ballot […]
by Cydney Posner As noted in this Reuters post, the Council of Institutional Investors, along with a number of individual pension funds and other institutional investors, have chimed in on the debate currently roiling the Delaware bar over fee-shifting bylaws, sending letters to the governor of Delaware, the chair of the […]