If one of your largest shareholders asked your company to join the more than 450 U.S. public companies that have adopted proxy access, would you know how to respond? Would it surprise you that since the beginning of 2015, the percentage of companies in the S&P 500 Index that have adopted proxy access has risen from less than 5 percent to more than 60 percent?
A hot topic at shareholder meetings for the last three years, proxy access is likely to impact corporate governance for years to come. With the 2018 proxy season quickly approaching, now is the time for executives to catch up on major developments from the last year and consider what your company should do to be prepared.
Proxy access is a method for shareholders to gain representation on the boards of public companies. Unlike a waging a proxy contest, utilizing proxy access does not require shareholders to bear the cost of preparing and distributing their own proxy materials. If your company does not already have proxy access procedures in place, a shareholder may propose changes to the company’s governing documents. Alternatively, your company could proactively amend its bylaws to provide for proxy access. In either case, once procedures are adopted, shareholders may demand that their director nominees be included in the company’s proxy materials (though no one has successfully had their nominees included using proxy access).
“Consider how open your company is to SHAREHOLDER suggestions. Have you communicated your willingness to engage? Can you demonstrate that you are listening?”
Here are the most significant trends and developments to keep in mind:
· More than 60 percent of the S&P 500 Index and more than 10 percent of the Russell 3000 have adopted proxy access. We expect the trend toward adoption to continue.
· The vast majority of proxy access bylaws require the nominating shareholder (or a group of up to 20 shareholders) to hold at least 3 percent of the company’s shares for at least 3 years in order to nominate up to 20 percent of the board. Many companies that initially adopted more onerous requirements have since amended their bylaws to align with these terms.
· Activist investor Mario Gabelli became the first known shareholder to attempt to use proxy access. Gabelli withdrew his nominee shortly after the company rejected his nominee for failure to meet the procedural requirements of their proxy access bylaw. It remains an open question under what circumstances proxy access will be used.
With these new developments in mind, we recommend taking the following steps:
· Stay apprised of where your shareholders stand. Many institutional investors support proxy access, but views are still evolving. For example, Fidelity Investments, which previously opposed all proxy access proposals, reversed its position in 2017.
· Evaluate your level of shareholder engagement. Investors championing proxy access often complain that their opinions on the selection of directors are not being heard. Many criticize the companies they target for not giving proper attention to issues such as board refreshment and diversity. Consider how open your company is to suggestions from shareholders. Have you communicated your willingness to engage? Can you demonstrate that you are listening to suggestions?
· Formulate a plan with your board. Be prepared to make a recommendation to your board on whether to proactively adopt proxy access. Regardless of what you decide, be sure you are prepared to act quickly if a shareholder raises this issue.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
