January 15, 2015

Proxy Access: Does Killing the “Group” Concept Make Sense?

When I blogged earlier this week about the 16 companies who have filed no-action requests related to shareholder proposals seeking proxy access, I forgot to mention the growing phenomena of some companies taking the “group” concept out of management’s proxy access proposal. It started with Whole Foods, who was the first to limit the “group” of shareholders who can submit a director nominee to one. In other words, under this framework, there is no group that can band together to meet the ownership threshold in a company’s access framework – a single shareholder has to pass muster.

Not all of the 16 companies battling proxy access shareholder proposals limit groups to a single shareholder – some limit the group to 10 (and some have no maximum). But some do follow Whole Foods lead and kill the group concept entirely with a “1 shareholder” limit (see the chart near the bottom of this CII alert). This is another way how some of these management proposals differ from the shareholder proposals submitted by the NY Comptroller and others. This new wrinkle is sure to draw the ire of some shareholders – it will be interesting to see if there is any fallout. Here’s a blog by Davis Polk’s Ning Chiu about Vanguard’s latest policy on proxy access proposals…

2nd Circuit Splits With 9th: MD&A Omissions Can Be Actionable in Section 10(b) Claims

Here’s an excerpt from this blog about an MD&A case by Kevin LaCroix:

On January 12, 2015, the Second Circuit ruled – in Stratte-McClure v. Morgan Stanley – “as a matter of first impression” for the appellate court, that a failure to make a disclosure required by Item 303 of Reg. S-K is an omission that can serve as a basis for a Section 10(b) securities fraud claim, but only if the other requirements to state a Section 10(b) claim – such as materiality and scienter – have been met. In ruling that a failure to make an Item 303 disclosure can state an actionable Section 10(b) claim, the Second Circuit reached a different conclusion on the issue than did the Ninth Circuit in an October 2014 decision on the same question.

January-February Issue: Deal Lawyers Print Newsletter

This January-February issue of the Deal Lawyers print newsletter includes articles on:

– Retention Awards at Acquired Companies
– Delaware Chart: Determining the Likely Standard of Review for Board Decisions
– Respecting Boilerplate: Liability, Party & Enforcement Provisions
– More on “Anatomy of a Proxy Contest: Process, Tactics & Strategies”

If you’re not yet a subscriber, try a 2015 no-risk trial to get a non-blurred version of this issue on a complimentary basis.

– Broc Romanek