Corporations and public pension funds are facing off over what one proponent is calling “the greatest advancement of shareholder fundamental rights,” the proposed rule by the SEC to allow stockholders access to corporate proxy material to nominate directors.
But there is least one major surprise among the opposing sides of institutional allies on the issue.
The United Brotherhood of Carpenters, a leading shareholder activist, “strongly urge(s) the commission not to adopt proposed Rule 14a-11 establishing a federal proxy access right for shareholder nominations,” Edward J. Durkin, director-corporate affairs department, wrote in a six-page comment letter to the SEC.
Instead of the broad mandate to allow nominations, the union supports a proposed amendment to “Rule 14a8(i)(8) to enable shareholders, under certain circumstances, to require companies to include in company proxy materials proposals that would establish or request the establishment of a proxy access right for shareholder director nominees.”
Among the roughly 500 comment letters submitted to the Securities and Exchange Commission, only about a dozen came from investment management companies, including Barclays Global Investors, T. Rowe Price Associates Inc. and AllianceBernstein LP, all three of which supported the proposal to some extent.
BGI, in a letter submitted by Abe Friedman, managing director and global head of corporate governance and proxy voting, said the San Francisco-based firm supports the proposal if it is modified make it tougher for “investors with short-term goals or take-over interests” to abuse the system.
T. Rowe Price Associates Inc. supports the access concept in general, but believes the SEC needs to rework the proposal, according to the money manger's comment letter.
Among corporate governance advisory firms, The Corporate Library, RiskMetrics Group Inc., GovernanceMetrics International Inc. and Governance for Owners LLP support the proposal, according to their letters.
Marco Consulting Group, a pension investment consultant, also submitted a letter of support.
The California Public Employees' Retirement System, California State Teachers' Retirement System, Florida State Board of Administration, Ohio Public Employees Retirement System, Colorado Public Employees' Retirement Association and the Connecticut Retirement Plans and Trust Funds all endorsed the proposal in separate letters.
Numerous companies — including Procter & Gamble Co., 3M Co., AT&T Inc., Emerson Electric Co., Boeing Co. and UnitedHealth Group Inc. — submitted letters opposing adoption of the proposed rule.
Steven W. Jemison, chief legal officer and secretary, and E.J. Wunsch, assistant secretary and associate general counsel for Cincinnati-based Procter & Gamble, wrote: “The SEC's proposed rule seems to assume that all boards of directors are not as accountable to shareholders as they should be — thus, the need for a rule for shareholder nomination of directors that is universal. In our experience, this assumption is wrong.”