SRP-Represented Investors Responsible for 36% of Successful 2012 Shareholder Proposals

Editor’s Note: Professor Lucian Bebchuk is the Director of the 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.

According to a recent news alert by the Council of Institutional Investors, 97 precatory proposals have so far received majority support at annual meetings taking place during the first seven months of 2012. As explained below, investors represented by the Shareholder Rights Project (SRP) are responsible for over one-third of the precatory proposals receiving majority support at annual meetings so far this year.

During the 2011-12 proxy season, the SRP has been representing and advising a number of institutional investors in connection with the submission of shareholder proposals. These precatory proposals urge repealing the classified board and moving to annual elections, which are widely viewed as corporate governance best practice.

Thirty-seven proposals submitted by five SRP-represented investors — Illinois State Board of Investment (ISBI), the Los Angeles County Employees Retirement Association (LACERA), the Nathan Cummings Foundation (NCF), the North Carolina State Treasurer (NCDST), and the Ohio Public Employees Retirement System (OPERS) — have already gone to a vote at 2012 annual meetings. These proposals have obtained the support, on average, of 80.89% of votes cast, and thirty-five of the proposals passed. The 35 proposals brought by SRP-represented investors that passed represent 36% of all of the shareholder proposals receiving majority support at annual meetings this year.

In addition to the precatory proposals by SRP-represented investors receiving majority support at annual meetings, it is worth noting that the SRP and the institutional investors working with the SRP have been able to reach negotiated outcomes with over forty companies. Following active engagement, those companies entered into agreements committing them to bring management proposals to declassify their boards. Management proposals brought pursuant to such agreements have already passed at 27 S&P 500 companies, resulting in the declassification of those companies’ boards. A list of these companies, and further information about these successful engagements, is available here.

The table below lists the 35 S&P 500 companies where precatory proposals by SRP-represented investors received majority support during the first seven months of 2012. Further information about each of these proposals, including the majority obtained and the SRP-represented investor submitting the proposal, is available here.

Apache Corporation (APA) Lorillard, Inc. (LO)
Baxter International Inc. (BAX) MEMC Electronic Materials, Inc. (WFR)
Bemis Company (BMS) Masco Corporation (MAS)
Best Buy Co, Inc. (BBY) Moody’s Corporation (MCO)
CF Industries Holdings, Inc. (CF) Netflix, Inc. (NFLX)
CarMax, Inc. (KMX) People’s United Financial, Inc. PBCT)
Cerner Corporation (CERN) QEP Resources, Inc. (QEP)
Chipotle Mexican Grill, Inc. (CMG) Quest Diagnostics Incorporated (DGX)
Cognizant Technology Solutions Corporation (CTSH) Ryder System, Inc. (R)
DENTSPLY International Inc. (XRAY) SCANA Corporation (SCG)
EQT Corporation (EQT), inc. (CRM)
Edwards Lifesciences Corporation (EW) Snap-On Incorporated (SNA)
F5 Networks, Inc. (FFIV) US Steel Corporation (X)
FLIR Systems, Inc. (FLIR) Urban Outfitters, Inc. (URBN)
FMC Corporation (FMC) V.F. Corporation (VFC)
Hess Corporation (HES) Vornado Realty Trust (VNO)
Lexmark International, Inc. (LXK) Vulcan Materials Company (VMC)
Limited Brands, Inc. (LTD)
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One Comment

  1. James McRitchie
    Posted Thursday, August 9, 2012 at 9:45 am | Permalink

    Now, imagine if a dozen universities replicated the efforts of Harvard’s SRP. Congratulations!

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