TheCorporateCounsel.net

Earlier this year, I shared on our Proxy Season Blog that Glass Lewis and at least one big asset manager are considering “director commitment policies” as part of their review and voting recommendations/decisions. A blog from Stefan Padfield of the National Center for Public Policy Research recaps the proponent perspective on this topic, with a novel proposal submitted to several companies this past season that requested directors to:

“disclose their expected allocation of hours among all formal commitments set forth in the director’s official bio, with allocation being permissible “on a weekly, monthly, or annual basis.”

The Corp Fin Staff agreed with several companies that this proposal could be excluded from the proxy statement on the basis of micromanagement. Another company did not seek no-action relief, submitting the proposal to a vote by stockholders, where it received support from about 3% of the voting power. But Stefan says the NCPPR is undeterred:

Given the ever-increasing responsibilities of corporate directors, as well as generally increasing demands on their time, limiting oversight of overboarding to counting board seats and CEO spots is unsustainable. Accordingly, we will likely be submitting a similar proposal next season and urging the SEC staff to reconsider its conclusion in Johnson & Johnson. Asking prospective directors how they intend to allocate their hours among their often numerous commitments should not be viewed as improper micromanagement but rather basic accountability fully within the ambit of shareholders to request.

Be on the lookout for more on this topic as we head into 2025…

– Liz Dunshee