Tag: shareholder proposals

Will the issue of firearms safety be reignited for the next proxy season?

As you know, topics related to corporate social responsibility have ascended to the forefront for many stakeholders, and CSR is sometimes viewed to comprise issues related to firearms safety. With the renewed national debate on gun safety, and in light of  apparent continued government gridlock, will investors, customers, employees and other stakeholders turn to companies to “do something”? Will they begin to apply more pressure to companies involved with firearms, including retailers and banks, to reexamine their relationships with the gun industry?  For the 2019 proxy season (unlike  2018), we did not find any shareholder proposals directly addressing gun safety (although some did indirectly) that were submitted for shareholder votes.  Will current events reignite the topic of gun safety as a subject for shareholder proposals in 2020?

Proposals for political spending disclosure make headway this proxy season

In this article from the Center for Political Accountability, the authors tout the recent “banner proxy season” for disclosure of political spending, both in terms of the uptick in shareholder support for disclosure proposals submitted by CPA (and its “shareholder partners”) and the number of shareholder proposals withdrawn as a result of agreements reached with companies for disclosure of political spending and board oversight. According to the authors, these results reinforce “earlier findings about ‘private ordering’ making political disclosure and accountability the new norm for companies.” Is there a new “eagerness by companies to adopt or strengthen political disclosure and accountability policies”? Is it now viewed as a key element of good governance?  What is the impact of today’s highly politicized environment?

SEC officials preview developments regarding shareholder proposals and proxy advisors

As noted in thecorporatecounsel.net blog, last week, the Center for Capital Markets Competitiveness of the U.S. Chamber of Commerce held an event discussing corporate governance and possible reforms.  Both SEC Chair Jay Clayton and Corp Fin Director Bill Hinman were interviewed on stage and previewed a number of potentially important developments regarding, among other topics, proxy advisory firms and shareholder proposals. 

Mandatory arbitration shareholder proposal goes to court—as Chair Clayton suggested

You might remember this no-action letter to Johnson & Johnson granting relief to the company if it relied on Rule 14a-8(i)(2) (violation of law) to exclude a shareholder proposal requesting adoption of  mandatory shareholder arbitration bylaws. (See this PubCo post.) In that letter, the staff relied on an opinion from the Attorney General of the State of New Jersey, the state’s chief legal officer, which advised the SEC that the proposal was excludable under Rule 14a-8(i)(2) because “adoption of the proposed bylaw would cause Johnson & Johnson to violate applicable state law.” The issue was so fraught that SEC Chair Jay Clayton felt the need to issue a statement supporting the staff’s hands-off position: “The issue of mandatory arbitration provisions in the bylaws of U.S. publicly-listed companies has garnered a great deal of attention.  As I have previously stated, the ability of domestic, publicly-listed companies to require shareholders to arbitrate claims against them arising under the federal securities laws is a complex matter that requires careful consideration,” consideration that would be more appropriate at the Commissioner level than at the staff level. However, mandatory arbitration was not an issue that he was anxious to have the SEC wade into at that time. To be sure, if the parties really wanted a binding answer on the merits, he suggested, they might be well advised to seek a judicial determination. And, you guessed it—Clayton’s words to the proponent’s ears—the proponent filed this complaint on March 21. 

SEC Commissioner Peirce “airs her grievances” with CII

Happy International Women’s Day! To celebrate, let’s hear from Hester Peirce, the only woman SEC Commissioner.  (Irony intended.)

In a speech delivered a few days ago to the Council of Institutional Investors, after expressing her gratitude for those contributions by CII to the public debate that Peirce views favorably (regarding proxy voting, stock buybacks and disclosure reform), she takes the opportunity to “air her grievances,” citing as a model Seinfeld’s 1997 Festivus episode. (“I got a lot of problems with you people, and now you’re gonna hear about it.”) What’s her complaint?  It’s the focus of CII and other investors on what she views to be “non-investment matters at the expense of concentration on a sound allocation of resources to their highest and best use. Real dollars are being poured into adhering to an amorphous and shifting set of virtue markers.” And the pressure on the SEC “to get on the bandwagon and drag others with us is pretty intense. We are being asked more and more to shift securities disclosure to focus more on matters that do not go to an assessment of how effectively companies are putting investor money to work.”

Is it time for corporate political spending disclosure?

A new bill that has been introduced in the House, H.R. 1053, would direct the SEC to issue regs to require public companies to disclose political expenditures in their annual reports and on their websites.  While the bill’s chances for passage in the House are reasonably good, that is not the case in the Senate. In the absence of legislation, some proponents of political spending disclosure have turned instead to private ordering, often through shareholder proposals.  So far, those proposals have rarely won the day, perhaps in large part because of the absence of support from large institutional investors.  But that notable absence has recently come in for criticism from an influential jurist, Delaware Chief Justice Leo Strine.   Will it make a difference?

Have we reached an inflection point on environmental and social shareholder proposals?

In this thoughtful article from the Managing Editor at ISS Analytics, The Long View: US Proxy Voting Trends on E&S Issues from 2000 to 2018, the author contends that, notwithstanding high-level data showing relatively static median vote support for shareholder proposals over the last 19 years, that data is deceptive:  “the reality is that investor voting behavior among owners of U.S. companies has changed significantly—perhaps almost revolutionarily—over the past two decades.” What’s more, “the most significant change in investors’ voting behavior pertains to environmental and social issues, as these proposals are earning record levels of support in recent years.”