As discussed in our previous client alert, the universal proxy rules that went effective on August 31, 2022 require proxy cards distributed by both public companies and nominating shareholders in contested director elections to include both sides’ director nominees, such that shareholders casting their vote can “mix-and-match" nominees from each of the company’s and the dissident’s slate of director nominees.
Proxy Access
Division of Corporation Finance Issues Interpretive Guidance on the SEC’s Universal Proxy Rules
On August 31, 2022, the universal proxy rules adopted late last year by the Securities and Exchange Commission (the “SEC") will become effective. As discussed in our previous client alert, the rules require proxy cards distributed by both public companies and nominating shareholders in contested director elections to include both sides’ director nominees, such that shareholders casting their vote can “mix-and-match" nominees from each of the company’s and the dissident’s slate of director nominees.
Commonsense Principles 2.0 Released
On October 18, 2018, the Commonsense Principles 2.0 (the “Principles 2.0") were released. They are an update to the Commonsense Principles of Corporate Governance (the “Previous Principles") developed in 2016 by a group of 13 business and investment leaders, including representatives of Berkshire Hathaway, BlackRock and State Street and the chief executive officers of several large public companies, available here, and discussed in a previous client alert.
Shareholder Nominates First Proxy Access Nominee
In what appears to be the first use of a company’s proxy access bylaw, GAMCO Asset Management filed today a Schedule 13D/A (available here ) and a Schedule 14N (available here ) announcing that it has used the proxy access bylaw at National Fuel Gas (NFG) to nominate a director candidate for election at NFG’s 2017 Annual Meeting. According to the 13D/A, GAMCO and its affiliates beneficially own in the aggregate approximately 7.81% of NFG’s Common Stock and yesterday delivered a letter to NFG nominating Lance A. Bakrow to the Board of Directors. NFG described itself in its most recent Form 10-K as “a diversified energy company engaged principally in the production, gathering, transportation, distribution and marketing of natural gas.” According to the Schedule 13D/A, Mr. Bakrow is the “co-founder and a director of Greenwich Energy Solutions, a private company that provides independent energy solutions in the northeastern United States.” NFG’s Proxy Access Bylaw
SEC Staff Reverses Longstanding Precedent on Exclusion of Conflicting Shareholder Proposals Rule; Affirms Business as Usual on Ordinary Business Rule
On October 22, 2015, the Securities and Exchange Commission’s ("SEC" or "Commission") Division of Corporation Finance (the "Division") issued Staff Legal Bulletin No. 14H ("SLB 14H"), setting forth a dramatically different standard for when it will concur that a shareholder proposal that conflicts with a company proposal can be excluded from the company’s proxy statement under Rule 14a-8(i)(9). The Division also reaffirmed its views on the application of the "ordinary business" standard in Rule 14a-8(i)(7). SLB 14H is available here.
Council of Institutional Investors Announces Its Views on Proxy Access Best Practices
Today the Council of Institutional Investors (“CII”), a nonprofit association of corporate, public and union employee benefit funds and endowments that seeks to promote effective corporate governance practices for U.S. companies and strong shareholder rights and protections, published a report titled “Proxy Access: Best Practices” that describes CII’s views on seven provisions that companies typically address when implementing proxy access. The CII report is available here.
ISS Releases Survey for 2016 Policy Updates
Institutional Shareholder Services (“ISS”) today launched its annual global policy survey. Each year, ISS solicits comments in connection with the review of its proxy voting policies. At the end of this process, in November 2015, ISS will announce its updated proxy voting policies applicable to 2016 shareholders’ meetings.
ISS Issues Guidance on Proxy Access Voting Policy and Other Key Policies
On February 19, 2015, Institutional Shareholder Services (“ISS”) issued FAQs (available here) clarifying its policy on proxy access proposals as well as other key issues, including omission of shareholder proposals from company proxy materials in the absence of no-action relief from the Securities and Exchange Commission (“SEC”) staff, exclusive forum bylaws, and other bylaw amendments adopted without shareholder approval. 1. Proxy Access. Under the approach announced in the FAQs, ISS generally will support both shareholder and company proposals that provide for proxy access with the following features:
SEC Ceases To Issue No-Action Letters on Conflicting Shareholder Proposals
Today the Securities and Exchange Commission (“SEC”) staff announced that it will no longer express views on the application of Rule 14a-8(i)(9), one of the bases for excluding shareholder proposals from company proxy materials, during the current proxy season. The staff’s announcement is a result of today’s announcement by SEC Chair Mary Jo White that she has directed the staff of Division of Corporation Finance to review the rule and report to the Commission on its review.
SEC Staff Grants No-Action Letter Excluding Proxy Access Shareholder Proposal
In a significant decision, the staff of the Securities and Exchange Commission today issued a no-action letter concurring that a proxy access shareholder proposal could be excluded from a company’s proxy materials under Rule 14a‑8. The proposal, submitted to Textron Inc. by John Chevedden on behalf of Kenneth Steiner, requested adoption of a bylaw amendment permitting shareholders to include in the company’s proxy materials director candidates nominated by any shareholder(s) that had continuously held one percent of the company’s voting securities for two years or by any group of shareholders “of whom one hundred or more satisfy SEC Rule 14a‑8(b) eligibility requirements.