Spring Meeting: Corporate Governance Round Table - Part Two: Proxy Access

After beginning the discussion with Say-on-Pay, the panel turned its attention to Proxy Access. After a brief summary of the 3 percent for 3 years (“3-3 Rule”), and an overview of the D.C. Circuit argument, the panel posed three primary issues. First, will Proxy Access continue to exist as proposed?  Next, is there a better alternative to the 3-3 Rule such as proxy reimbursement for successful or even nearly successful campaigns. The final alternative is keeping shareholders completely removed from the process.

Proponents of proxy access stated that it would only be used in extreme circumstances. Further, panelists discussed the importance of allowing investors to have influence within the Board and a forum for their ideas. However, other panelists did not see this as the correct vehicle for investors to have that voice. The panel continued by stating that many state laws previously allowed for 10% shareholders to call a special meeting, but that the 3-3 Rule creates problems due to its lack of definition of a sufficient interest.

The panel concluded the discussion on this issue in agreement that the main issue here is who pays. This led to further discussion of a Proxy Reimbursement plan. Also, it led to some speculation regarding the SEC’s next step if the Circuit decision goes against them.