The New York City Pension Funds is again mounting a proxy access campaign. Similar to last proxy season, the NYC Pension Funds have filed proxy access proposals at 72 major public companies this proxy season. The proposals, which are non-binding, request companies to adopt proxy access bylaws.
The NYC Pension Funds’ campaign this proxy season continues on the heels of its very successful 2015 campaign. According to the New York City Comptroller press release, since November 2014, the number of companies with proxy access bylaws has significantly increased from 6 to 115, an unprecedented rate of adoption for shareowner-driven initiatives.
Last proxy season, the NYC Pension Funds submitted non-binding shareholder proposals at 75 major public companies, which requested that companies adopt a bylaw to give shareholders owning 3% of a company for 3 or more years the right to list their director candidates on a company’s ballot. Joined by a coalition of investors with more than $1 trillion of assets under management, the campaign has been remarkably successful: two-thirds of the proposals that went to a vote received majority support and 37 of the companies have agreed to enact proxy access bylaws to date, largely consistent with the terms sought by the NYC Pension Funds.
For this proxy season, the NYC Pension Funds’ proxy access campaign targets companies that met one or both of the following two criteria:
- Thirty-six companies targeted last year that have not yet enacted, or agreed to enact, a 3% bylaw with “viable” terms. This includes companies that enacted “unworkable” bylaws requiring 5% ownership, some of which received binding proposals to amend their bylaw. Proxy proposals at six of these companies have already been withdrawn after the companies enacted, or agreed to enact, a 3% bylaw.
- Thirty-six new companies, with a focus on the funds’ largest portfolio companies as well as coal-intensive utilities, board diversity laggards and companies with “excessive” CEO pay. Proxy proposals at nine of these companies have been withdrawn after the companies enacted, or agreed to enact, a 3% bylaw.
The list of companies subject to the NYC Pension Funds’ 2016 proxy access campaign is included as an Appendix to this client update below.
Appendix (click image to enlarge)
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The Client Update is prepared by Meridian Compensation Partners’ Technical Team led by Donald Kalfen. Questions regarding this Client Update or executive compensation technical issues may be directed to Donald Kalfen at 847-235-3605 or dkalfen@meridiancp.com.
This report is a publication of Meridian Compensation Partners, LLC, provides general information for reference purposes only, and should not be construed as legal or accounting advice or a legal or accounting opinion on any specific fact or circumstances. The information provided herein should be reviewed with appropriate advisers concerning your own situation and issues.
Meridian comment. The rapid adoption of proxy access bylaws is largely due to the success of the NYC Pension Funds’ campaign. Shareholders have been supportive of non-binding proxy access proposals with the terms proposed by the NYC Pension Funds’ proposals. As such, we expect that the majority of the NYC Pension Funds’ proxy access proposals in 2016 will garner majority support from shareholders at most of the target companies.
Some parties have predicted that the proxy access right will continue to increase in prevalence and become an emerging market practice similar to the majority voting standard in director elections at large capitalization companies. Consequently, we expect that targeted companies will continue to be under pressure to adopt a meaningful proxy access right, particularly since the proxy advisory firms have adopted policies to hold directors accountable for the failure to adequately implement a majority-supported proxy access proposal.