Shareholder Activism Over Proxy Access Expected to Continue
The campaign by institutional investors to give shareholders the ability to nominate directors of U.S. public companies using the company’s ballot shows no signs of slowing and continues to evolve. Recently, Vanguard updated its proxy voting guidelines to indicate a preference for proxy access by a shareholder or group holding five percent of the stock for three years. And the Council of Institutional Investors (CII) has endorsed a lower threshold at three percent for two years. These institutional investor preferences are at odds with management proposals at companies such as Whole Foods that (1) require nominating shareholders to meet an ownership threshold of five to eight percent for a period of three to five years and (2) specify ownership by a single shareholder and not a group. This gap between what institutional investors are demanding and what management is offering caused CII to ask the SEC to “alter its interpretation of the ‘counterproposals’ basis for exclusion under Rule 14a-8(i)(9)” as overly broad in application in Whole Foods. As noted above, the SEC is currently undertaking just such a review. Read the CII letter to the SEC.