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Lots of Opining as 2013 Proxy Season Heats Up

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With this year’s proxy season well underway, bloggers throughout the nation continue to pontificate about the many hot topics facing public companies when it comes to shareholder voting. There’s a lot to learn, but to spare you some time:
 

  • Take a look at last week’s post byThe Metropolitan Corporate Counsel entitled, “This year’s Proxy Season, the Good News and the Bad News,” which sites say on pay and director independence as continuing issues.
     

  • Or you can look at the website,www.law.com, which focuses on environmental issues as dominant themes.
     

  • The Shareholder Rights Project, part of Harvard Law School’s Forum on Corporate Governance and Financial Regulation, recently announced that proposals it has submitted for 2013 meetings already have had significant impact, with declassifying boards and moving to annual director elections topping its list.
     

  • You also may want to look at www.boardmember.com; www.boardsuitecorp.com; www.proxymonitor.org; and www.corporatesecretary.com.
     

  • Many law firms and proxy solicitation firms are, of course, discussing current issues, as are most of the national law firms.
     

  • Then of course, there’s proxy advisory firm ISS, www.issgovernance.com, stating that political issues have surpassed environmental concerns this year, and that board diversity is elevating on the list of resolutions.
     

  • The other major proxy advisory firm, Glass Lewis, www.glasslewis.com, this year is adamant about board responsiveness to proposals that have received shareholder votes of 25 percent or more against a company’s recommendation.

 
That last one, board responsiveness, is among issues PondelWilkinson takes very seriously, and that ISS and Glass Lewis both continue to address. They will recommend a vote against directors if a board failed to act on a shareholder proposal that received the support of a majority of the shares outstanding the previous year, or if the board failed to act on a shareholder proposal that received a majority of shares cast in the last year and one of the two previous years.
 
My promise to spare you some time with this summary really isn’t sparing you much time at all. While there’s not much that is brand new this year, as always, there’s lots of noise out there, important issues brewing and many opinions of what’s hot. So it’s always a good idea to educate yourself if you are an issuer or a shareholder.

 

rpondel@pondel.com
 
 

Help Speed the Information Flow

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A lot has changed in the capital markets since the 1970s, particularly relating to the rapid dissemination of information. However, one key piece of information still reaches companies slower than the 405 Freeway on a Friday afternoon–13F reports showing changes in institutional shareholder ownership.
 
Today, 13F reports, the reporting form filed by institutional investment managers, reaches the public 45 days following the end of each quarter, a glacial pace when considering the advances in electronic communications. Now there is an effort underway to encourage the rapid dissemination of such information, changing that filing period to two days following the quarter.
 
NYSE Euronext, along with the Society of Corporate Secretaries and Governance Professionals and the National Investor Relations Institute recently petitioned the SEC to change the 13F reporting period, stating that the delay “hampers public companies’ ability to identify and engage with their shareholders, including their ability to consult with shareholders regarding “say on pay,” proxy access and other key corporate governance issues.”
 
The petition argues the following points: The length of the current 45-day delay period keeps material information from reaching investors and public companies on a timely basis;The objectives underlying section 13(f) support reducing the delay period; The arguments for maintaining a 45-day delay period are unpersuasive;A substantial reduction in the 45-day delay period would align rule 13(f) with public company governance best practices.
 
We certainly agree that this petition makes sense, especially when you consider the timely disclosure requirements under Regulation FD, filing requirements for 8k’s and Form 4’s, combined with management’s need to understand and know its shareholder base. To send a letter to the SEC in support of the petition, please click here.

 

— Matt Sheldon – msheldon@pondel.com