Last year, John blogged about a shareholder proposal submitted to Johnson & Johnson dealing with a mandatory arbitration bylaw. The SEC granted no-action relief to J&J but since then, the proponent filed a dispute and it’s pending. Now, the same shareholder proponent has submitted a similar proposal to Intuit and it’s up for a vote at the company’s annual shareholders’ meeting later this month.
Based on this “thank-you” letter that CII sent to Intuit’s board, it appears that CII and management have found a shareholder proposal they both agree should be rejected. CII’s letter thanks Intuit’s board for opposing the shareholder proposal. In the letter, CII says that it opposes attempts to keep shareholders from courts through introduction of forced arbitration clauses. Here’s an excerpt:
Mandatory shareowner arbitration clauses in public company governing documents represent a potential threat to principles of sound corporate governance that balance the rights of shareowners against the responsibility of corporate managers to run the business. More specifically, among the many problems that our members have identified with shareowner arbitration clauses is the fact that disputes that go to arbitration rather than the court system generally do not become part of the public record and, thereby, may lose their deterrent effect.
Intuit’s statement of opposition points out that no other shareholders have identified a mandatory arbitration bylaw as a significant concern. In reference to the J&J situation, it also notes that another similar proposal is subject to litigation and says that adoption of such a bylaw would likely expose the company to unnecessary litigation.
Presuming the proposal at Intuit is soundly rejected by shareholders and how the proponent fares in the J&J dispute, it will be interesting to see whether these mandatory arbitration bylaw proposals continue to crop up going forward.
Heads up: 2020 Peak Edgar Filing Dates
Now that 2020 is here, plan ahead – the SEC published the list of peak filing days for 2020. If submitting test filings, the SEC says those should be submitted as early as possible prior to the filing due date – as processing times will take longer during these high-volume filing periods.
Tomorrow’s Webcast: “Pat McGurn’s Forecast for 2020 Proxy Season”
Tune in tomorrow for the webcast – “Pat McGurn’s Forecast for 2020 Proxy Season” – when Davis Polk’s Ning Chiu and Gunster’s Bob Lamm join Pat McGurn of ISS to recap what transpired during the 2019 proxy season – and predict what to expect for 2020. Please print these webcast materials in advance – it’s Pat’s deck that he will be working with.
– Lynn Jokela