The Daily Journal recently interviewed Corporate partner Nicholas O’Keefe regarding his views on proxy access proposals in “Shareholder Pressure on Executive Compensation, Board Elections, Climate Change Dominate 2016 Proxy Season.”
The 2016 proxy season has revealed that shareholders appear inclined to pressure boardrooms to address issues on how executive compensation and director elections might impact a company’s bottom line, a notion dubbed “say on pay.” When speaking with the Daily Journal, O’Keefe explained how since the 2010 federal ruling stating that proxy access bylaws upheld the right of shareholders with a combined stake of three percent, owned for three years, to nominate up to 20 percent of the board during the next election, proxy access has gained enough momentum that companies of all sizes could contend with the action in the next few years.
“Some of the larger companies are already teeing up for that. This has the potential to galvanize and add a little more firepower to ‘say on pay.’ It’s going to get a lot of attention when it takes effect,” noted O’Keefe. “At this point, that ship has sailed, companies are going to lose trying to fight proxy access.”
An alternative measure for retaining some control, O’Keefe said, is to introduce a company-sponsored proxy access proposal. So long as the “three-three” model stays intact, this allows the board to draft the finer points of the bylaw, he said. The more contentious option is to fight a shareholder proposal with the company’s dueling proposal and hope for a less than 50 percent vote in favor.
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