August 7, 2015

CII Issues Proxy Access Best Practices (No Companies Comply)

Earlier this week, the Council of Institutional Investors (CII) issued these Proxy Access: Best Practices outlining its position on seven proxy access bylaw or charter provisions that companies use and which CII characterizes as troublesome. According to this WSJ article, none of the 32 companies that had implemented proxy access as of late June comply with all seven, i.e., each had at least one of the “troublesome” provisions.

Seven “Troublesome” Proxy Access Provisions

Ownership threshold of 5%
% or number of directors that may be elected could result in fewer than two candidates
Aggregation of stockholders limited to specified number
Lack of clarity on whether loaned shares count toward the ownership threshold
Requirement to continue to hold shares after annual meeting
Restrictions on renominations when nominee fails to receive specific % of votes
Prohibition on third party compensation arrangements with proxy access nominee

In this blog, Gibson Dunn describes each of the provisions, along with CII’s position on what constitutes “best practices,” the treatment of the issue under Rule 14a-11, and data on prevailing practices among companies that have adopted proxy access.

Access heaps of helpful resources in our “Proxy Access” Practice Area.

ESMA Best Practice Principles: Chartered Secretaries Cite No Improvement in Proxy Advisor Practices

Hat tip to the Society of Corporate Secretaries & Governance Professionals for this blurb:

ESMA Publishes Responses on Shareholder Voting Rights to Best Practice Principles

Yesterday, the European Securities and Markets Authority (ESMA) published the responses received to its call for evidence on shareholder voting rights. ESMA had sought specific feedback from investors, proxy advisors, corporate issuers and other stakeholders on how they perceived the most recent proxy seasons since the Best Practice Principles for Providers of Shareholder Voting Research and Analysis (BPP) were initially published in March 2014.

Referencing its Summer 2015 Boardroom Bellwether survey, the Institute of Chartered Secretaries and Administrators’ (ICSA) comment letter noted that 58% of companies perceived the influence of proxy advisers on shareholder engagement with the company to be negative (only 14% cited a positive influence), and that its members have noticed no changes in the BPP signatories’ practices since the BPP publication other than a deterioration in the time given for issuers to respond to proxy advisor reports (in the case of at least one of the original signatories to the BPP).

The ICSA’s letter further indicates that the BPP has made no difference in improving issuer understanding of – or confidence in – the proxy advisory industry and that, although it may be premature to evaluate the impact of the BPP, additional measures would be necessary to achieve this, including requirements to, e.g., provide issuers with a minimum time to respond to reports before they are issued; take into account any errors identified by issuers and correct reports; clarify actions responsive to conflicts of interest; and disclose processes for checking report information.

Podcast: Survey Reveals GC’s Value to the Board/C-Suite

In this podcast, John Gilmore discusses the increasing value of the GC to the Board and C-Suite based on Barker Gilmore’s recent survey of CEOs and directors, including:


– by Randi Val Morrison