Proxy Rules

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In a case of first impression, GAMCO Asset Management (“GAMCO”) recently nominated a director to the board of National Fuel Gas Company (“NFG”) pursuant to NFG’s recently adopted proxy access bylaw.[1]  As far as we know, this is the first time any shareholder has nominated a director using proxy access. 
Continue Reading Proxy Access in Action: Is This What Everyone Wanted?

Cleary Gottlieb and PwC’s Governance Insights Center have teamed up to create the Executive Compensation Series, which looks at the factors motivating boards to increasingly engage with shareholders about executive compensation. The first edition of the series is now available and discusses issues such as the impact of Dodd-Frank on executive compensation, elements of effective CD&A design and the influence of proxy advisors on compensation.
Continue Reading Boards, Shareholders and Executive Pay

The SEC stepped back into the proxy access arena on February 12, 2016, with a volley of 18 no-action letters on a single day that sharply reduced uncertainty about an important tactical point.

At issue was the circumstances under which a company with an existing proxy access bylaw can exclude a shareholder proxy access proposal based on “substantial implementation” under Rule 14a-8(i)(10).  Of the 18 companies, 14 adopted a bylaw after receiving a shareholder proxy access proposal for the 2016 proxy statement, and then sought to exclude the shareholder proposal.  That tactic was tried only once in 2015, by General Electric; there, the sole distinction between the adopted bylaw and the proposal was that the adopted bylaw imposed a limit (20) on the number of shareholders who may form a group, while the shareholder proposal simply referred to “a group of shareholders,” and the SEC granted no-action relief.
Continue Reading Proxy Access: The SEC Re-enters the Arena

After several years that seemed defined by turmoil and uncertainty, 2015 delivered some unexpected and much-needed clarity for corporate directors on issues such as proxy access, compensation disclosure, investor expectations regarding board composition, certain director and financial advisor conflicts of interest, and audit committee processes and related disclosure. The past year also saw corporations adopting…

On Friday, December 18, ISS issued new guidance on how a board implements a majority-supported shareholder proposal for a proxy access bylaw.  The guidance is contained in its Frequently Asked Questions on U.S. Proxy Voting Policies and Procedures.

This guidance identifies situations in which ISS may recommend votes against a company’s individual directors, nominating/governance committee members, or the entire board, based on the specific provisions of a company’s enacted proxy access bylaw.
Continue Reading ISS Releases Guidance on Proxy Access

Equity Plan Scorecard Updates

Institutional Shareholder Services (ISS) implemented the Equity Plan Scorecard (“EPSC”) last year as a new means of evaluating and recommending votes in favor of or against equity plans submitted for shareholder approval.  ISS evaluates a proposed equity plan under a number of different factors and assigns a score for each component, weighting components differently in accordance with its methodology.  Plans that receive at least 53 points out of 100 possible will receive “for” recommendations.
Continue Reading ISS Gearing Up for the 2016 Proxy Season: Revisions to the Equity Plan Scorecard, Soliciting Updates to Peer Groups, and Delayed Guidance on Proxy Access

As expected, 2014 proved to be a challenging year for boards.  The legal and economic environments continued to grow more complex, and directors faced increasing scrutiny from investors and governmental authorities in the forms of market reaction, shareholder activism, litigation and enforcement and regulatory activity.  We expect these trends to continue, and boards will need to remain extremely proactive in their oversight and involvement in 2015.
Continue Reading Selected Issues for Boards of Directors in 2015

On June 30, the Divisions of Investment Management and Corporation Finance of the SEC issued staff guidance, in the form of a Staff Legal Bulletin, addressing investment advisers’ responsibilities in voting client proxies and retaining proxy advisory firms.  The guidance also addresses the requirements of the exemptions from the federal proxy rules that proxy advisory firms may seek to satisfy. 
Continue Reading SEC Issues Staff Guidance on Rules Applicable to Investment Advisers and Proxy Advisory Firms