SRP Mid-Proxy-Season Results: 19 Boards Declassified, 13 Precatory Declassification Proposals Passed

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.

This post describes the results produced so far during the 2013 proxy season as a result of the work that the Shareholder Rights Project (SRP) has done on behalf of SRP-represented clients. Thus far, this work has already resulted in the following 2013 outcomes:

  • 19 boards of S&P 500 and Fortune 500 companies declassified following the adoption of agreed-upon management proposals at 2013 annual meetings; and
  • 13 precatory proposals passed at the 2013 annual meetings of S&P 500 and Fortune 500 companies, with an average support of 78%.

Further details about these results (including lists of all the relevant S&P 500 and Fortune 500 companies) are provided below. We note that these results add to those obtained during 2012 in which the work of the SRP and SRP-represented investors resulted in:

  • 42 board declassifications at S&P 500 companies; and
  • 39 precatory proposals passed at S&P 500 companies, with an average support of 82% of votes cast.

19 Boards Already Declassified during 2013

Declassifications Following Agreements: As described in the Negotiated Agreements page of the SRP website, following an active engagement by the SRP and SRP-represented investors, many S&P 500 and Fortune 500 companies receiving declassification proposals for 2012 and 2013 annual meetings have entered into agreements to bring management declassification proposals to a vote of shareholders. Management proposals to declassify brought pursuant to such agreements have already passed during 2013 at 19 such companies. Panel A of Table 1 below provides further details about each of these declassifications.

Additional Agreed-Upon Management Declassification Proposals Expected during 2013: Many additional declassification are expected to take place in 2013 as a result of the work by the SRP and SRP-represented investors. In particular, agreed-upon management proposals are expected to go to a vote at the annual meetings of 17 additional S&P 500 and Fortune 500 companies by the end of 2013. Panel B of Table 1 provides further details about those of the 17 companies that have already publicly announced the agreed-upon management proposals.

13 Successful 2013 Precatory Proposals

Although the SRP and the SRP-represented investors have been able to reach negotiated outcomes with many of the S&P 500 and Fortune 500 companies receiving proposals for 2013 annual meetings, in other cases such negotiated outcomes have not been obtained and proposals therefore went, or are expected to go, to a vote.

The voting outcomes of proposals going to a vote are already known for 14 S&P 500 and Fortune 500 companies, and 13 of these proposals passed receiving average support of 78% of votes cast. The one proposal that did not pass achieved a support of 49.8% of votes cast.

Table 2 below provides further details about the above 14 precatory proposals. As voting outcomes on additional precatory proposals become know, updated information will appear on the Successful Proposals page of the SRP website.

Table 1: 2013 Declassifications Due to Work of the SRP and SRP-Represented Investors

Company Proponent
Panel A: 2013 Declassifications Already Taking Place
CF Industries Holdings, Inc. (CF) LACERA
Edwards Lifesciences Corporation (EW) ISBI
EQT Corporation (EQT) OPERS
F5 Networks, Inc. (FFIV) ISBI
FLIR Systems, Inc. (FLIR) NCF
FMC Corporation (FMC) NCF
Johnson Controls, Inc. (JCI) PRIM
L-3 Communications Holdings Inc. (LLL) NCDST
Lexmark International (LXK) NCDST
Lorillard, Inc. (LO) ISBI
Manpower Inc. (MAN) SBA
MetroPCS Communications, Inc. (PCS) LACERA
Monsanto Company (MON) PRIM
Moody’s Corporation (MCO) NCF
O’Reilly Automotive, Inc. (ORLY) NCF
People’s United Financial, Inc. (PBCST) NCDST
Ryder System, Inc. (R) NCDST
Snap-On Inc. (SNA) NCDST
Xylem Inc. (XYL) NCF
Panel B: Additional Management Declassification Proposals to be Voted on in 2013 (Partial)
Best Buy Co, Inc. (BBY) NCF
CarMax, Inc. (KMX) NCF
Cerner Corporation (CERN) ISBI
Chipotle Mexican Grill, Inc. (CMG) ISBI
Citrix Systems, Inc. (CTXS) LACERA
Cognizant Technology Solutions Corporation (CTSH) LACERA
Crown Castle International Corp. (CII) SERS
DENTSPLY International Inc. (XRAY) LACERA
GameStop Corp. (GME) NCF
Hess Corporation (HES) NCDST
Limited Brands, Inc. (LTD) ISBI
NII Holdings, Inc. (NIHD) SBA
Principal Financial Group, Inc. (PFG) ISBI
QEP Resources, Inc. (QEP) ISBI
Roper Industries, Inc. (ROP) LACERA, inc. (CRM) NCF
Unum Group (UNM) LACERA

Table 2: 2013 Precatory Proposals

Company Proponent
2013 Precatory Proposals that Passed
Air Products and Chemicals, Inc. (APD) PRIM
Ashland Inc. (ASH) PRIM
BorgWarner, Inc. (BWA) NCF
Costco Wholesale Corporation (COST) PRIM
Huntsman Corporation (HUN) SBA
Jacobs Engineering Group Inc. (JEC) PRIM
Kellogg Company (K) NCDST
NCR Corporation (NCR) SBA
Rockwell Collins, Inc. (COL) PRIM
SCANA Corporation (SCG) SERS
Teradata Corporation (TDC) NCDST
Varian Medical Systems, Inc. (VAR) PRIM
United States Steel Corporation (X) NCDST
2013 Precatory Proposals that Did Not Pass
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