Ten Additional Companies Disclose Management Declassification Proposals Made Pursuant to Agreements

Editor’s Note: Professor Lucian Bebchuk is the Director of the Harvard Law School Shareholder Rights Project (SRP), and Scott Hirst is the SRP’s Associate Director. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University. An earlier post about the SRP’s activities is available here, a critique of the SRP’s activities by Martin Lipton and Theodore Mirvis is available here, and a response to this critique by Jeffrey Gordon is available here.

Since the Harvard Law School Shareholder Rights Project (SRP) issued its March 19 News Alert (reprinted in a post here), ten additional companies have made filings disclosing management proposals to declassify their boards made pursuant to agreements that these companies entered with institutional investors represented and advised by the SRP. With these ten additional companies, the number of companies that have made filings disclosing such management proposals during this proxy season – all listed here – has increased to 31.

During the 2011-12 proxy season, the SRP has been representing and advising several institutional investors – the Illinois State Board of Investment (ISBI), the Los Angeles County Employees Retirement Association, the Nathan Cummings Foundation (NCF), the North Carolina State Treasurer (NCDST), and the Ohio Public Employees Retirement System – in connection with the submission of shareholder proposals to over eighty S&P 500 companies with a staggered boards. The proposals urge a move to annual elections, which are widely viewed as corporate governance best practice.

Through active engagement with companies receiving declassification proposals, the SRP and the institutional investors working with the SRP have been able to reach negotiated outcomes with forty-three companies receiving such proposals (one additional company entered into an agreement since the March 19 News Alert). These forty-three companies have entered into agreements committing them to bring management proposals to declassify their boards.

The new companies disclosing management proposals made in accordance with such agreements (with the proponent submitting the shareholder proposal in parenthesis) are: C.H. Robinson Worldwide, Inc. (NCF); CenturyLink, Inc. (ISBI); Coventry Health Care, Inc. (ISBI); Flowserve Corporation (NCDST); FMC Technologies Inc (NCDST); Hudson City Bancorp, Inc. (NCF); Juniper Networks, Inc. (ISBI); O’Reilly Automotive, Inc. (NCF); Western Union (NCF); and Wyndham Worldwide Corporation (NCF). The full list of companies that have made filings disclosing management proposals made pursuant to agreements with institutional investors represented and advised by the SRP is available here. The list will be updated periodically as additional companies of those entering into agreements to bring management declassification proposals make such filings.

All of these companies, including the ten companies newly announcing management proposals, should be commended for their willingness to engage in a dialogue with shareholder proponents and their representatives and advisers – and for their responsiveness to shareholders’ preferences regarding classified boards.

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