February 24, 2004

California Proposes Shareholder Access Legislation

Over the weekend, California’s Secretary of State Kevin Shelley sponsored shareholder access legislation – introduced by Assemblymember Judy Chu – that would go a few steps further than the SEC’s proposal in this area. The California bill – Assembly Bill 2752 – would require companies to hold elections that meet certain requirements, such as:

Number of shareholder nominees – Not less than 40% of the total number of directors must be eligible for election by shareholders.

Shareholder eligibility РShareholder or group must have more than 2% of the company’s stock held for 2 years to make a nomination.

Soliciting support – Companies required to make information available to shareholders no less than once per year.

Deadlines and candidate information – Proxy statements shall include statements provided by candidates of no less than 250 words in length.

Disclosure and notice – Nominating shareholder or group must provide notice to company no later than 80 days before the mail date and the proxy card shall identify any shareholder nominees and present them in an impartial manner. Each candidate must be voted on separately. If a company includes statements in its proxy statement supporting company nominees or opposing the nominating shareholder’s nominee or nominees, the nominating shareholder or nominating group shall be given the opportunity to include a statement not to exceed 500 words per nominee.

Website info – Companies would be required to make information regarding the process and deadlines to nominate and elect an individual to the board available on their website and in their annual report. The California Secretary of State will must create an online database by the end of ’05.

Reach of bill – Corporations doing business in California that provide for shareholders to submit and vote on proposals on an annual ballot shall implement any proposal that passes by a majority vote unless the proposal clearly states it is advisory. If a corporation establishes a means to place an advisory shareholder proposal on the ballot, it shall also establish a means to place shareholder proposals on the ballot that are required be implemented.

Obviously, this is one to watch carefully – and hopefully won’t moot the thousands of comment letters submitted to the SEC. Letters should be directed to: Assemblywoman Judy Chu, State Capitol Room 2114, Sacramento, CA 95814 and Willie Guerrero, Assistant Secretary of State, 1500 – 11th Street, Executive Office, Sacramento, CA 95814.

“Opt-In” Shareholder Access No-Action Request

In our “Shareholder Access Portal,” we have posted a copy of the no-action request filed with the SEC by Marsh & McClennan in its efforts to exclude the “opt-in” triggering shareholder proposal that I blogged about back on February 9th.

Fairness Opinions from I-Banker’s Perspective

On, I have posted my interview with Joel Johnson on Fairness Opinions. Joel is President of Orchard Partners which provides fairness opinions, advises clients in mergers and acquisitions and provides business valuation services.