In the last three years, proxy access has been adopted by 475 companies (including 65% of the S&P 500), proving again the effectiveness of private ordering by shareholders to enhance their rights.
As a follow-up to our previous Sidley Corporate Governance Reports on proxy access, this report reflects 2017 developments on the topic, including:
- The continuing pace of proxy access bylaw adoptions and ongoing convergence toward standard key parameters (83% of companies that adopted proxy access in 2017 did so on the following terms: 3% for 3 years for up to 20% of the board (at least 2 directors) with a nominating group size limit of 20);
- Slightly increased average support (54% versus 51%) for shareholder proposals to adopt proxy access in 2017, but fewer proposals being voted on as more companies adopted proxy access in exchange for withdrawal of the proposals;
- The failure to pass of all shareholder “fix-it” proposals seeking specified revisions to existing proxy access provisions in 2017, despite favorable recommendations from ISS;
- The uncertainty created in July 2017 when the Staff of the SEC’s Division of Corporation Finance denied a company’s request to exclude a fix-it proposal solely seeking the removal of the nominating group size limit after previously allowing dozens of companies that had adopted proxy access on market standard terms to exclude fix-it proposals solely seeking an increase in the limit on the basis of substantial implementation;
- No attempt to utilize proxy access at a U.S. public company since one failed attempt in late 2016; and
- Fidelity’s shift from opposing to supporting shareholder proxy access proposals, which could impact the ability of many companies to defeat such proposals.
Finally, this report includes an updated appendix which highlights, on a company-by-company basis, the various detailed terms of proxy access provisions adopted by 475 companies in 2015, 2016 and 2017, including the terms adopted by 131 additional companies since our January 2017 report. It also includes an updated appendix summarizing recent fix-it proposals and responses from the SEC Staff to requests to grant no-action relief to companies seeking to exclude such proposals and voting results on such proposals.
Please click here to view the full Sidley Corporate Governance Report in PDF format.
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