Thirty-Six Precatory Declassification Proposals Going to a Vote at Annual Meetings

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 initial post about the SRP’s activities during this proxy season is available here, a critique of the SRP’s activities by Martin Lipton and Theodore Mirvis is available here, a response to this critique by Jeffrey Gordon is available here, and a recent post about companies disclosing management declassification proposals made pursuant to agreements is available here.

This post provides information about thirty-six precatory board declassification proposals, submitted by institutional investors represented and advised by the Harvard Law School Shareholder Rights Project (SRP), that are expected to go to a vote at annual meetings during this proxy season.

During the 2011-12 proxy season, the SRP has been representing and advising several institutional investors – Illinois State Board of Investment (ISBI) , the Los Angeles County Employees Retirement Association (LACERA), the Nathan Cummings Foundation (NCF), the North Carolina Department of State Treasurer (NCDST), and the Ohio Public Employees Retirement System (OPERS) – in connection with the submission of precatory shareholder proposals to more than eighty S&P 500 companies that have classified boards. The proposals urge repealing the classified board and moving 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 (as of today) forty-four of the companies receiving such proposals. These companies have entered into agreements committing them to bring management proposals to declassify their boards. (A partial list of companies entering into such agreements, including only companies that have already made public filings that disclose the planned management proposals, is available here.)

In many other companies receiving proposals, however, the SRP and the institutional investors working with the SRP have not been able to obtain such negotiated outcomes. In such cases, the shareholder proposals urging board declassification are expected to go, or have already gone, to a vote at 2012 the annual meeting.

Thus far, only one proposal has gone to a vote. The proposal, submitted by the Illinois State Board of Investments to the F5 Networks, Inc. (FFIV), won 77% of the votes cast.

Below is a list of thirty-six companies where shareholders are expected to vote at the 2012 annual meeting on shareholder proposals submitted by institutional investor represented and advised by the SRP. Where the proxy statement has already been issued, the date of the meeting and a link to the proxy statement are also provided. The list does not include companies where a dialogue is still ongoing. The list will be updated periodically and the most updated version is available here.

Companies Where Precatory Declassification Proposals
Are Expected to Go to a Vote

Company Proponent Meeting Date
Moody’s Corporation (MCO)
(Proxy Statement)
NCF April 16
EQT Corporation (EQT)
(Proxy Statement)
OPERS April 18
People’s United Financial, Inc. (PBCT)
(Proxy Statement)
NCDST April 19
Kellogg (K)
(Proxy Statement)
NCDST April 20
FMC Corporation (FMC)
(Proxy Statement)
NCF April 24
PACCAR Inc. (PCAR)
(Proxy Statement)
NCDST April 24
United States Steel Corporation (X)
(Proxy Statement)
NCDST April 24
V.F. Corporation (VFC)
(Proxy Statement)
NCF April 24
Lexmark International, Inc. (LXK)
(Proxy Statement)
NCDST April 26
Snap-On Incorporated (SNA)
(Proxy Statement)
NCDST April 26
FLIR Systems, Inc. (FLIR)
(Proxy Statement)
NCF April 27
Hess Corporation (HES)
(Proxy Statement)
NCDST May 2
Bemis Company, Inc. (BMS)
(Proxy Statement)
NCDST May 3
SCANA Corporation (SCG)
(Proxy Statement)
NCDST May 3
Ryder System, Inc. (R)
(Proxy Statement)
NCDST May 5
Baxter International Inc. (BAX)
(Proxy Statement)
NCF May 8
Masco Corporation (MAS)
(Proxy Statement)
ISBI May 8
CF Industries Holdings, Inc. (CF)
(Proxy Statement)
LACERA May 10
Edwards Lifesciences Corporation (EW)
(Proxy Statement)
ISBI May 10
Quest Diagnostics Incorporated (DGX)
(Proxy Statement)
ISBI May 11
QEP Resources, Inc. (QEP)
(Proxy Statement)
ISBI May 15
Lorillard, Inc. (LO)
(Proxy Statement)
ISBI May 17
Cerner Corporation (CERN)
(Proxy Statement)
ISBI May 18
Urban Outfitters, Inc. (URBN)
(Proxy Statement)
ISBI May 22
Apache Corporation (APA)
(Proxy Statement)
ISBI May 24
Limited Brands, Inc. (LTD)
(Proxy Statement)
ISBI May 24
Chipotle Mexican Grill, Inc. (CMG)
(Proxy Statement)
ISBI May 31
Cognizant Technology Solutions Corporation (CTSH)
(Proxy Statement)
LACERA June 5
Airgas, Inc. (ARG) LACERA Pending
Best Buy Co, Inc. (BBY) NCF Pending
CarMax, Inc. (KMX) NCF Pending
DENTSPLY International Inc. (XRAY) LACERA Pending
MEMC Electronic Materials, Inc. (WFR) NCDST Pending
Netflix, Inc. (NFLX) LACERA Pending
Vornado Realty Trust (VNO) ISBI Pending
Vulcan Materials Company (VMC) ISBI Pending
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