March 11, 2015

Proxy Access: Pru Becomes 1st to Adopt Without Shareholder Proposal Pressure (& 1st “Dueling Proposals” Proxies Filed)

Big news! Prudential has become the first company to adopt proxy access proactively without having a shareholder proposal. Under a bylaw amendment adopted yesterday, Pru adopted a 3%/3-year formula – along with a group cap of 20 shareholders & nomination cap of 20% of board seats. Coincidence that Peggy Foran is the corporate secretary at Pru? Now you know why she has earned the “Lifetime Achievement Award” at the upcoming “The Women’s 100” conference.

Meanwhile, Exelon filed its preliminary proxy statement yesterday and it includes dueling proxy access proposals: the NYC Comptroller proposal and an alternative board proposal with a formula of 5%/3-years (group cap of 20 investors & 20% of board). Interestingly, the board proposal is also precatory. AES Corp and Cloud Peak Energy also have filed their proxy statements with dueling proposals. AES Corp with a management proposal that is non-binding – and Cloud Peak with a binding management proposal (& the proxy includes bylaw text). Hat tip to Cleary’s Nick Grabar & Sustainalytics’ Gary Hewitt for pointing these out!

Remember that our webcast is coming up on March 24th to discuss all these developments: “Proxy Access: The Halftime Show.”

Usability Study: Investors Frustrated With Disclosure

Add this blog by Davis Polk’s Ning Chiu to the one I recently posted on our “Proxy Season Blog”…

The SEC’s Investor Advocate Wants Layered Disclosure & Structured Data

The SEC’s relatively new Investor Advocate – Rick Fleming – delivered his first speech, describing his office’s role and providing a view about how companies can make their disclosure more effective with the use of “layered data” and structured data. Here’s an excerpt:

In my view, if the SEC wants issuers to provide effective disclosure to the 21st Century investor, the data needs to be both layered and structured. To understand what is meant by the term “layered data,” simply picture a company website. The company does not put all the information into one long web page that requires users to scroll down endlessly. Rather, the information is split into manageable pieces that utilize appealing graphics, with tabs and hyperlinks to help users quickly find the information that is most important to them. By similarly layering the data in an S-1 or 10-K, the SEC could greatly assist the individual investor who takes it upon herself to research an investment opportunity.

In contrast, structured data could assist the analyst or intermediary who wants to search data dynamically and compare multiple companies by slicing and dicing the data. Millions of investors in pension plans and other pooled investment vehicles could greatly benefit from these enhanced analytical tools, and smaller reporting companies may find greater trading volume in their shares as analysts are able to use data more effectively and cover more companies.

Fleming also questioned the new bill – HR 37, the “Promoting Job Creation and Reducing Small Business Burdens Act” – which was recently passed by the House as it would create an exemption from the XBRL filing requirements for 60% of public companies.

– Broc Romanek