TheCorporateCounsel.net

One of the emerging items on this year’s shareholder proposal agenda has been requests for companies to convert to benefit corporations. Here’s an excerpt from this Faegre Drinker memo on these proposals:

Fifteen public companies received and voted on proposals to convert to benefit corporations at their 2021 annual meetings of shareholders, a dramatic shift from the previous year, when not one of these companies received a proposal to convert. Shareholder proponents requested companies approve an amendment or take the necessary steps to amend their certificates of incorporation and, if necessary, bylaws to become a benefit corporation.

The Shareholder Commons, a nonprofit that states it is seeking to catalyze a movement of shareholders that insist on responsible business, assisted the shareholder proponents with these requests. Accordingly, although each proposal was uniquely tailored to the specific company, the proposals exhibited a common rationale — prioritizing stakeholder interests in addition to shareholder interests is vital.

The memo reviews how companies responded to these proposals, and provides a chart indicating the level of support that they received. It turns out that most didn’t fare too well.

The blog notes that only a handful of proponents were responsible for these proposals, and suggests that the small proponent group & limited support raises the question of whether this initiative will have staying power or is just a fleeting trend. Personally, I have the same question about about benefit corporations themselves.

By the way, don’t say we didn’t warn you that these proposals were coming – over on the “Proxy Season Blog“, Liz gave everyone a heads-up last fall, when she blogged about The Shareholder Commons’ offer of drafting assistance to proponents.

– John Jenkins