New York City Comptroller Scott Stringer announced this week that New York City’s public pension funds have filed 72 new shareowner resolutions that call upon companies to adopt meaningful proxy access bylaws.
In November 2014, Stringer—who serves as the investment advisor to, and custodian and a trustee of, the $160 billion pension funds—announced an initiative intended to give shareowners a greater ability to nominate directors at U.S. companies. With what is called the Boardroom Accountability Project, he filed 75 proxy access shareowner proposals requesting bylaws that give shareowners who meet a threshold of owning three percent of a company for three or more years the right to list their director candidates, representing up to 25 percent of the board, on a company’s ballot. The proposals were subject to shareowner votes in 2015 at companies that do not voluntarily agree to the request.
The initial proposals were filed based on three priority issues: climate change, board diversity, and excessive CEO pay. Among the companies targeted were Exxon, eBay, Chipotle, Electronic Arts, Staples, Hasbro, and Duke Energy. A full list of companies can be found here.
Universal proxy access was originally proposed by the U.S. Securities and Exchange Commission in 2003, a reaction to accounting scandals at Enron and WorldCom. In 2010, that the SEC approved a universal proxy access rule and the Dodd Frank Act affirmed that authority. However, a lawsuit filed in 2010 in the Federal District Court for the District of Columbia by the Business Roundtable and U.S. Chamber of Commerce successfully vacated the rule on procedural grounds. Despite the decision, the SEC does still allow “private ordering,” the ability to file individual shareowner resolutions requesting proxy access.
In total, 109 companies have enacted viable proxy access bylaws since the launch of the initiative, either in response to a shareowner proposal or proactively, including 78 companies between October and December 2015.
The 2016 list includes 36 companies from the earlier initiative that have not yet enacted, or agreed to enact, a 3 percent threshold, includes companies that enacted bylaws requiring 5 percent ownership. Among the newly added companies are Johnson & Johnson, Pfizer, Bed Bath & Beyond, American Airlines, Wells Fargo, Home Depot, Caterpillar, and Amgen.
Recent studies have shown the link between proxy access and shareowner value, Stringer says. A 2014 analysis of studies by the CFA Institute found that proxy access could improve the responsiveness of boards, which could raise the value of all companies by nearly 1 percent or $140 billion across the U.S. market. A 2015 study by staff economists at the Securities and Exchange Commission found a 0.5 percent increase in shareholder value at the 75 companies the Boardroom Accountability Project targeted.