36 Declassification Proposals Going to a Vote in April and May

Editor’s Note: Lucian Bebchuk is the Director of the Shareholder Rights Project (SRP), Scott Hirst is the SRP’s Associate Director, and June Rhee is Counsel at the SRP. The SRP, a clinical program operating at Harvard Law School, works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies, as well as on research and policy projects related to corporate governance. 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. The work of the SRP has been discussed in other posts on the Forum available here.

As a result of the work of the Shareholder Rights Project (SRP) and SRP-represented investors, declassification proposals will be voted on in April and May 2013 at the annual meetings of 36 S&P 500 and Fortune 500 companies:

  • At 28 companies, agreed-upon management proposals to declassify will be brought to a shareholder vote of approval pursuant to agreements entered into with SRP-represented investors;
  • At 8 companies, where such agreements have not been reached, precatory proposals that the SRP has submitted on behalf of SRP-represented investors will go to a vote.

These 36 proposals are in addition to 9 proposals that already went to a vote and were approved at annual meetings of S&P 500 and Fortune 500 companies in 2013 (3 management proposals and 6 precatory proposals), as well as the many additional declassification proposals (both agreed-upon management proposals and precatory proposals) that will go to a vote at subsequent annual meetings.

Agreed-Upon Management Proposals: Table 1 below lists the 28 S&P 500 and Fortune 500 companies where agreed-upon management proposals will be going to a vote in April and May 2013, and provides additional details, including the name of the SRP-represented proponent and a link to the company’s proxy statement.

Through active engagement with companies receiving declassification proposals for 2013 annual meetings, the SRP and SRP-represented investors have so far reached negotiated outcomes with 46 S&P 500 and Fortune 500 companies agreeing to move towards annual elections, more than 60% of the companies receiving proposals this proxy season. In addition to the 28 agreed-upon management proposals that will go to a vote in April and May, 3 management declassification proposals have already gone to a vote in 2013, all of which passed, and 4 companies have declassified by amending their bylaws, resulting in the declassification of 7 companies (details of these 7 declassifications can be found here). The remainder of the agreed-upon management proposals will be brought for shareholder approval at subsequent annual meetings.

Precatory Proposals: Table 2 below lists the 8 S&P 500 and Fortune 500 companies where precatory proposals submitted by the SRP on behalf of SRP-represented investors will be going to a vote in April and May 2013, as well as provides additional details about each of the companies, including the name of the SRP-represented proponent and a link to the company’s proxy statement.

The SRP and SRP-represented investors were not able to obtain negotiated outcomes with all of the companies to which the SRP submitted precatory declassification proposals on behalf of SRP-represented investors and, as a result, the precatory proposals submitted on behalf of SRP-represented investors will be going to a vote. In addition to the 8 precatory proposals that will be going to a vote in April-May 2013, 6 precatory proposals have already gone to a vote at 2013 annual meetings, and all of these six proposals passed (detailed results of these proposals can be found here). Other precatory proposals will also go to a vote at subsequent annual meetings.

SRP-represented Investors: The SRP submitted declassification proposals to 74 S&P 500 and Fortune 500 companies, and has been engaging with these companies, on behalf of eight institutional investors – the 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), the Ohio Public Employees Retirement System (OPERS), the Massachusetts Pension Reserves Investment Management Board (PRIM), the Florida State Board of Administration (SBA) and the School Employees Retirement System of Ohio (SERS). More information about these investors is available here. The SRP provides SRP-represented investors with a range of services, including in connection with selecting companies for proposal submission, designing proposals, submitting proposals on behalf of represented investors, engaging with companies, negotiating and executing agreements by companies to bring management declassification proposals, and presenting proposals at annual meetings.

Expected Impact: The proposals listed in Tables 1 and 2 below can be expected to contribute substantially to the large-scale move toward annual elections. Annual elections are widely viewed as corporate governance best practice. Additional information about the value of moving to annual elections and the scale of the change taking place can be found in the SRP’s 2012 annual report.

Table 1: 28 S&P 500 and Fortune 500 Companies Where Agreed-Upon Management Declassification Proposals Are Expected to Go to a Vote in April-May 2013

Company Proponent Annual Meeting
Apache Corporation (APA)
(Proxy Statement)
ISBI 05/16/13
Baxter International Inc. (BAX)
(Proxy Statement)
NCF 05/07/13
Cerner Corporation (CERN)
(Proxy Statement)
ISBI 05/24/13
CF Industries Holdings, Inc. (CF)
(Proxy Statement)
LACERA To be announced
Chipotle Mexican Grill, Inc. (CMG)
(Proxy Statement)
ISBI 05/17/13
Crown Castle International Corp. (CII)
(Proxy Statement)
SERS 05/23/13
Edwards Lifesciences Corporation (EW)
(Proxy Statement)
ISBI 05/14/13
EQT Corporation (EQT)
(Proxy Statement)
OPERS 04/17/13
FLIR Systems, Inc. (FLIR)
(Proxy Statement)
NCF 04/26/13
FMC Corporation (FMC)
(Proxy Statement)
NCF 04/23/13
Lexmark International (LXK)
(Proxy Statement)
NCDST 04/25/13
Limited Brands, Inc. (LTD)
(Proxy Statement)
ISBI 05/23/13
Lorillard, Inc. (LO)
(Proxy Statement)
ISBI 05/14/13
Manpower Inc. (MAN)
(Proxy Statement)
SBA 04/30/13
Marathon Petroleum Corporation (MPC)
(Proxy Statement)
NCF 04/24/13
Masco Corporation (MAS)
(Proxy Statement)
ISBI 05/07/13
Moody’s Corporation (MCO)
(Proxy Statement)
NCF 04/16/13
NII Holdings, Inc. (NIHD)
(Proxy Statement)
SBA 05/22/13
People’s United Financial, Inc. (PBCST)
(Proxy Statement)
NCDST 04/18/13
PPG Industries, Inc. (PPG)
(Proxy Statement)
NCDST 04/18/13
QEP Resources, Inc. (QEP)
(Proxy Statement)
ISBI 05/24/13
Reinsurance Group of America, Incorporated (RGA)
(Proxy Statement)
SERS 05/15/13
Ryder System, Inc. (R)
(Proxy Statement)
NCDST 05/03/13
Snap-On Inc. (SNA)
(Proxy Statement)
NCDST 04/25/13
SPX Corporation (SPW)
(Proxy Statement)
SBA 05/02/13
St. Jude Medical Inc. (STJ)
(Proxy Statement)
ISBI 05/02/13
Vulcan Materials Company (VMC)
(Proxy Statement)
ISBI 05/10/13
Xylem Inc. (XYL)
(Proxy Statement)
NCF 05/07/13

Table 2: 8 S&P 500 and Fortune 500 Companies Where Precatory Declassification Proposals Are Expected to Go to a Vote in April-May 2013

Company Proponent Annual Meeting
BorgWarner, Inc. (BWA)
(Proxy Statement)
NCF 4/24/13
Huntsman Corporation (HUN)
(Proxy Statement)
SBA 5/2/13
Kellogg Company (K)
(Proxy Statement)
NCDST 4/26/13
NCR Corporation (NCR)
(Proxy Statement)
SBA 4/24/13
PACCAR Inc. (PCAR)
(Proxy Statement)
NCDST 4/29/13
SCANA Corporation (SCG)
(Proxy Statement)
SERS  4/25/13
Teradata Corporation (TDC)
(Proxy Statement)
NCDST  4/30/13
United States Steel Corporation (X)
(Proxy Statement)
NCDST  4/30/13
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