April 24, 2017

Shareholder Proposals: No-Action Letter Stats

Here are stats about this year’s no-action letters for shareholder proposals, courtesy of this Bloomberg blog:

An increase in number of no-action letter requests: Over 220 requests were submitted – almost a 10% increase over 2016.

E&S requests were most common: Together, human rights & environmental proposals were the subject of 71 no-action requests. Companies were successful in excluding 62% of the human rights proposals – but only 17% of the environmental proposals.

Ongoing attention to proxy access: 49 companies attempted to exclude proposals on proxy access – and the Corp Fin Staff granted relief more than 75% of the time. Most of these were probably “fix-it” proposals. As I blogged today on our “Proxy Season” blog, companies are starting to find a roadmap for excluding these proposals on the basis of “substantial implementation.”

Requests vary by industry: Most of the no-action requests were submitted by companies in the financials, consumer discretionary & health care industries. In the financial sector, 9 out of 40 no-action requests dealt with shareholder proposals relating to executive compensation. In consumer discretionary, most of the requests related to human rights/social issues.

Also note that the Manhattan Institute recently released its shareholder proposal stats for the proxy season…

Director Communications: Convenience v. Security

How does your board balance convenience & security? Directors need to be able to access & interact with documents while traveling – but their accounts & devices are prime targets for hackers.

Recently, NYSE & Diligent surveyed 350 directors to understand current practices. Among other findings: 92% use unsecured personal email accounts for at least some board communications – yikes! Here’s another nugget:

It’s a bit perplexing that the auditing of board communications, accompanied by cybersecurity training for directors, has not yet become routine. At most companies, board members are on the front lines of a pitched battle; directors are targeted for cyberattack precisely because they have access to the most sensitive information with the least amount of oversight…

Experts agree, the company’s information security officers should provide a similar level of oversight, cyber risk auditing, and cybersecurity training for directors as for the rest of the company, and a director’s ability to adhere to proper procedure should be considered a basic standard for continued membership on the board.

Transcript: “Whistleblowers – What Companies Should Be Doing Now”

We have posted the transcript for our recent webcast: “Whistleblowers – What Companies Should Be Doing Now.”

Liz Dunshee