GOVERNANCE

U.S. companies’ proxy access bylaws similar on key provisions, CII finds

Many U.S. companies’ proxy access bylaws contain similar key provisions, said a Council of Institutional Investors report released Thursday.

For the 347 public U.S. companies with proxy access that CII analyzed, nearly all follow the “3 and 3” approach under which a shareholder or a group of shareholders must own at least 3% of the company’s outstanding stock for at least three years to nominate a director, the report said.

None of the companies analyzed has holding requirements greater than three years, and only seven companies have ownership requirements above 3% — Hooper Holmes, LSB Industries, Panhandle Oil & Gas, Nabors Industries, VCA, Covanta and EMCORE.

CII also found that more than 80% of the companies with proxy access prohibit directors nominated by proxy access from generally constituting more than 20% of the board (63% limit the number of directors that shareholders can nominate to two candidates or 20% of the board, whichever is greater; 2% cap it at one director or 20% of the board, whichever is greater; and 17% have a 20% cap).

Among the report’s other findings:

  • 87% of companies specify that no more than 20 shareholders can aggregate their holdings to meet the ownership requirements to nominate a candidate to the board.
  • 89% omit an access candidate if the nominator is also waging a proxy contest with a different candidate on the dissident card.
  • 83% require disclosure of external compensation arrangements related to an individual’s service or actions as director; 42% require disclosure of external compensation arrangements related to the nominee’s candidacy.

The 347 companies analyzed account for more than half of the Russell 3000’s market capitalization.