Massachusetts Pension Reserves Investment Management Board and the Shareholder Rights Project Collaborate

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.

In a joint media release, available here, the SRP and the Massachusetts Pension Reserves Investment Management Board (PRIM) recently announced their collaboration to encourage a significant number of public companies to consider moving to annual elections.

PRIM is charged with the general supervision of the Pension Reserves Investment Trust (PRIT) Fund, with pension assets exceeding $49 billion. PRIM, on behalf of the PRIT Fund, has submitted shareholder declassification proposals for 2012 and 2013 annual meetings to twenty companies with staggered boards, and the SRP is representing and advising PRIM and the PRIT Fund in connection with these proposals. The proposals urge a repeal of the companies’ classified board structures and a move to annual elections, which are widely viewed as corporate governance best practice.

Through active engagement, PRIM and the SRP have been already able to reach negotiated outcomes with four S&P 500 companies that received declassification proposals. These companies have entered into agreements to put forward management proposals to declassify their boards of directors at their annual meetings. Engagement with other companies receiving proposals is ongoing.

PRIM is the sixth institutional investor that the SRP has been representing and advising in connection with the submission of board declassification proposals to a large number of public companies. The proposals submitted by PRIM for 2012 annual meetings bring the total number of shareholder proposals on which the SRP has worked during 2012 to about 90. With the four S&P 500 companies making a commitment to bring management proposals to declassify their boards, the total number of such commitments resulting from the proposals on which the SRP has worked is now forty-eight — close to 40% of all the S&P 500 companies that had a staggered board as of the beginning of 2012.

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