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Overview
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 Access
a selection of shareholder proposals from 2007 proxy season, with links to
related proxy
disclosures
ISS
Governance Services (RiskMetrics Group)
- Reports average support on selection of
shareholder proposals Figure 1
- Provides summary chart on shareholder proposals
-- # Filed, # Voted, # of Known Results Figure 2
- Reports notable results on pay-related
Table 1
- Reports governance-related proposals
Table 2
- Reports on shareholder proposals during 2007
proxy season regarding executive pay and director elections
- Provides an overview of governance issues and
voting results from the 2007 proxy season
- Reports strong shareholder support for proposals
that call for board accountability: say on pay, majority voting, board
declassification, and right to call special meetings
- Also reports investors withdrew many proposals
following negotiations with companies, noting "an unprecedented level of
engagement between companies and shareholders" in 2007
Commentary
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"Say on Pay" Proposals
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 Hot issue during 2007 proxy season
- "The investors are seeking an annual, non-binding
advisory vote on the summary compensation table that every corporate board
presents to investors in its yearly proxy statement. The resolution was
submitted at companies where pay has been excessive or where there has been a
misalignment between pay and performance over the past three to five years,
including Affiliated Computer Services, Citigroup, Coca-Cola, Exxon Mobil, Home
Depot, Jones Apparel, Merck, Nabors, Pfizer, Qwest, Time Warner, UnitedHealth,
and Wal-Mart."
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Legislation
to require shareholder "say on pay" has been approved by House of
Representatives and companion bill has been introduced in Senate
See
Say on Pay Proposals
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Shareholder Access
Reimbursement of Proxy Expenses
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Stockholder
proposal calling for reimbursement of proxy expenses in contested election of
directors
- Calls for reimbursement of reasonable expenses
- For contested elections after adoption of
proposed bylaw
- So long as (a) election of fewer than 50% of
directors to be elected is contested, (b) one or more candidates nominated by
stockholder are elected to serve as directors, and (c) company stockholders are
not permitted to cumulate their votes for directors
- Caps reimbursement at amount expended by the
corporation in connection with such election
- Proponent is AFSCME
Alternative
to Shareholder Proxy Access
initiatives
by AFSCME and other shareholder activists
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CEO Compensation Proposals
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Shareholder
proponent
Lucian Bebchuk
Harvard Law School Calls
for bylaw provision requiring CEO compensation decisions be
ratified by supermajority vote of independent directors
Overview
of Proposals
- Proposal withdrawn based on company's agreement
to adopt bylaw provision requiring approval of CEO compensation by majority of
independent directors
- Company
had previously adopted revised Corporate Governance Guidelines
with majority requirement for independent director approval of CEO compensation
- CA, Inc. formerly Computer Associates
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Majority Voting
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Majority voting is being promoted by shareholder advocacy groups,
institutional
investors and others as way to improve director accountability Go
to Majority Voting
for more information
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Sample of Poison Pill Proposals
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2007 Proxy Season
Boeing 3.23.07
Definitive
- Subject any future poison pill to shareholder
vote
- Same proposal in Home Depot proxy statement
- Proponent: John Chevedden
Not approved
Chevron 3.19.07
Definitive
- Unanimous board vote for approval of any pill not
ratified by shareholders
- Proponent: Lucian Bebchuk
Not approved
El Paso
3.28.07
Definitive
- Defines "policy-abandoning decision" as board
decision (not ratified by stockholders) to deviate from existing policy on
adoption or extension of stockholder rights plan
- Prevents such decisions that are not
ratified by stockholders for which there is opposition on the board (affirmative
vote of less than 80% of board members)
- Allows any such decisions that are ratified by
stockholders
- Also calls for stockholder ratification of
director compensation in event of "policy-abandoning decision"
- Proponent:
Lucian Bebchuk
Not approved
Halliburton
4.02.07
Definitive
- Defines "policy-abandoning decision" as board
decision (not ratified by stockholders) to deviate from existing policy on
stockholder rights plans
- Prevents such decisions that are not
ratified by stockholders for which there is any opposition on board
(affirmative vote of less than 100% of board members)
- Allows any such decisions that are ratified by
stockholders
- Any amendment or repeal of proposed bylaw not
ratified by stockholders would require affirmative vote of all board
members
- Proponent: Lucian Bebchuk
Not approved
Hewlett-Packard
1.23.07
Definitive
- Subject any future poison pill to shareholder
vote
- Proponent: Nick Rossi
Approved
Time Warner
4.09.07
Definitive
- Bylaw subjects director compensation to
stockholder ratification in event board elects to maintain without stockholder
ratification a poison pill that has a term in excess of one year
- Proponent Lucian Bebchuk
Not approved
Verizon
3.19.07
Definitive
- Subject any future poison pill to shareholder
vote
- Proponent: Chris Rossi
Not approved
Walt Disney
1.12.07
Definitive
- Proposal called for affirmative vote of 75% of board members to adopt
or amend poison pill
- One-year limit on pills not ratified by
shareholders
- Proponent:
Lucian Bebchuk
- Developments after meeting
June 2007
- Walt Disney board adopted
bylaw amendment
that requires affirmative vote of majority of board members (including majority
of independent members) to adopt poison pill
- One-year limit on term unless 1> ratified by
stockholders or 2> extended by board in accordance with voting requirements
specified in bylaws
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Amended and Restated Bylaws filed as exhibit
to
Form 8-K
Not approved (two-thirds required for approval)
Background Information
Lucian
Bebchuk submitted proposal
to CA, Inc. in 2006
- Lucian Bebchuk sought declaratory judgment that
proposed bylaw is valid under Delaware law
- Court concluded issue in case not yet ripe for
consideration and denied request for declaratory relief
- Memorandum Opinion and Order
6.22.06
CA,
Inc. submitted proposal to stockholder vote at 2006 annual meeting
CA,
Inc. board subsequently adopted Stockholder Protection Rights Agreement, subject
to stockholder ratification at 2007 annual meeting
Commentary
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Select 2007 Proposals
Enforcement of Approved Proposals
Commentary
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What
Happens to Votes on Stockowner Proposals?
- The Harvard Law School
Corporate Governance Blog 10.18.07
- Carl Olson submitted a stockowner proposal
to Occidental Petroleum in 2003 proxy season, which requested additional
disclosures on enforceability of stockowner votes
- Access related disclosure in 2007 proxy statement
filed by Occidental Petroleum
 Vote
Required to Approve
Voting
Results
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The Report of Inspector of Elections will be published on Occidentals web site, www.oxy.com, within 14 calendar days following the meeting and the results of the vote will be included in Occidentals Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and in the Report on the Annual Meeting, both of which may be accessed through www.oxy.com.
Legal
Effect of Approval
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Each of the stockholder proposals set forth below is a request to the Board of Directors to consider a matter. If the proposal passes, the Board of Directors may consider, in its business judgment, whether to take the requested action or not, but it is not legally obligated to do so.
Board
Action with respect to Approved Proposals
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It has been the practice of Occidentals Board of Directors to consider matters that are approved by the stockholders and, if appropriate, to refer the matter to the appropriate Board committee for further study and recommendation to the full Board. Generally, this initial consideration and referral takes place at the next regularly scheduled meeting of the Board. Depending on the complexity of the issue and the desire of the committee to seek advice from independent advisors, the committee usually reports to the full Board no later than the final meeting of the calendar year, which is usually held in early December. The final action taken by the Board with respect to the proposal and, if applicable a timetable for implementation of the Board action, will be posted on Occidentals web site. In prior years, stockholder proposals with respect to poison pills and golden parachutes were approved and the Board took action to adopt policies responsive to the concerns raised in those proposals.
Stockholder
Right to Enforce a Proposal
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As explained above, generally stockholder proposals are requests to the Board to consider a matter. If a proposal that is approved requests that the Board take, or refrain from taking, some action and the Board does not do so, then the stockholder may submit the same proposal for consideration at the next Annual Meeting, by following the procedures described on page 44. In the alternative, a stockholder may challenge the Boards business judgment not to implement the proposal by commencing litigation in the Chancery Court of the State of Delaware, Occidentals state of incorporation. Delaware law contains certain procedural requirements that must be followed before a suit may be commenced, including a requirement that, unless it would otherwise be futile, a demand be made on Occidental identifying the alleged wrongdoers, the wrongdoing allegedly perpetrated and the resultant injury to Occidental and the legal action the stockholder wants the Board to take on Occidentals behalf.
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Related Topics
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