More proxy access proposals have won a majority level of shareholder support this year than in any other year, leading one asset owner executive to conjecture a tipping point has been reached in terms of investors and management embracing the concept.
So far, six shareholder access proposals have prevailed in shareholder voting, while management has introduced three such proposals, all also winning a majority of shareholder vote in support. Another company agreed to implement access in advance of a vote.
The proposals enable company shareholders to use corporate proxy materials to nominate directors to corporate boards.
Of the shareholder proposals, none has been adopted by the companies, although one board has it under review. The three companies with the management proposals will implement access.
“It is a record number of majority votes” for each type — shareholder proposal or management proposal — said Patrick McGurn, special counsel, Institutional Shareholder Services Inc., Rockville, Md.
A record number of proposals — 20 — has been filed this year, with 14 coming to a vote so far, according to ISS Voting Analytics database. The average level of support this year has been 39.4%.
In 2013, votes were cast on 16 shareholder access proposals, with a 33.1% average level of support.
Abercrombie & Fitch Co. shareholders are among the most recent to approve an access proposal with a 55.3% vote on June 19. The proposal was filed by the $150 billion New York City Retirement Systems, the $28.5 billion Connecticut Retirement Plans & Trust Funds, Hartford, and the $4.3 billion Philadelphia Public Employees Retirement System.
“The Abercrombie vote caps a proxy season in which proxy access reached a tipping point in terms of investor support and increasingly, board acceptance,” said Scott M. Stringer, New York City comptroller who oversees the five pension funds of the New York City system, in an e-mail.
The Abercrombie & Fitch board, which opposed the proposal, “will consider the outcome of the vote and determine the best course of action in the best interests of all shareholders,” said a company statement.
Charles M. Elson, the Edgar S. Woolard Jr. chair in corporate governance and professor of finance, professor in legal studies and director of the John L. Weinberg Center for Corporate Governance, University of Delaware, Newark, said, “I think (proxy access) is an idea that has found significant shareholder support.
“It's not just that (access) idea. It's the idea that shareholders want greater input into board selection. It's not shareholders are (looking) for a fight,” Mr. Elson said. “Shareholders are saying that we want to have more of an input into the process by which director nominees are selected.”