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Proxy access - war war not jaw jaw

The US proxy access debate took a fresh turn recently with the attempt by seasoned governance commentator James McRitchie (www.corpgov.net) to get a shareholder proposal on the ballot at US organic food retailer Wholefoods. He submitted a proposal under which one or more shareholders owning 3% or more of outstanding shares for at least three years could “account for 20% of directors through proxy access”.

Wholefoods then came up with its own proposal and the SEC ruled that the two proposals conflicted. McRitchie’s proposal didn’t go forward and a preliminary agenda was posted by Wholefoods with a proxy access proposal. Despite a number of differences between the two, the SEC ruled that the two proposals conflicted and so McRitchie’s proposal was rejected.

Concerns were brought to the SEC’s attention, not least by McRitchie and last week the SEC announced that it would review the basis for exclusion and would not be expressing any views on such exclusion requests for this upcoming US proxy season.

The reaction of shareholders is likely to be one of relief. SEC records (www.sec.gov) show that 51 resolutions had been subject to exclusion requests by companies at the date of the SEC’s announcement and these will not now be rejected by the SEC on the grounds of conflict.

The reaction of companies was “meaner than a junkyard dog”. In a letter to ISS and Glass Lewis (other proxy agencies are available!) US issuer representative The Business Roundtable opines that it would be “inappropriate for ISS and Glass Lewis (read all proxy agencies) to apply their voting policies in a way that substitutes their own judgement as to the appropriate course of action in place of the Board’s judgement” and that “companies may have no choice but to consider litigation if they want to adjudicate their rights under Rule 14a-8”.

So the US anti-governance lobby continues on its trajectory of a) attempting to suppress open debate on a legitimate governance policy issue and b) shooting messengers rather than engaging with the owners.


Meaner than a junkyard dog? From the lyrics of the Jim Croce 1973 number one song “Bad, Bad, Leroy Brown


What do you think?