The number of governance-related shareholder proposals that appeared on ballots in the first half of each respective year has skyrocketed, from 172 in 2014 to 238 in 2015, reflecting a breakout year for proxy access proposals.
The number of governance-related shareholder proposals that appeared on ballots in the first half of each respective year has skyrocketed, from 172 in 2014 to 238 in 2015, reflecting a breakout year for proxy access proposals. These access proposals and calls for independent board chairs were number one and number two, respectively, on the shareholder proposal leaderboard. While the number of shareholder proposals addressing shareholders’ right to call special meetings and act by written consent increased from 2014, perennials addressing board declassification, majority voting, and the reduction or elimination of supermajority requirements fell to multi-year lows.
The abundance of governance shareholder proposals on ballot stemmed from the SEC’s moratorium on the use of Rule 14a-8(i)(9) as a basis to exclude shareholder proposals from proxy ballots. Prior to the moratorium, companies regularly requested the exclusion of a shareholder proposal under Rule 14a-8(i)(9) if that proposal directly conflicted with a board-presented proposal at the same shareholder meeting.
The moratorium on SEC Rule 14a-8(i)(9) limited companies’ ability to exclude shareholder proposals on this basis and presented them with limited options in their handling of shareholder proposals: place the proposal on the ballot but recommend shareholders reject the proponent’s terms, place the proposal on the ballot but endorse the proponent’s terms, settle with the proponent, or proceed with a board-sponsored proposal to directly compete with the shareholder proposal on the ballot. Only a handful of companies chose to proceed with the latter route, with mixed results.
Ultimately, shareholders at 12 companies were presented with both board and shareholder proposals in either proxy access or the right to call special meetings.
