One novel feature of the 2020 proxy season has been the surge in virtual shareholder meetings.
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Hunton Andrews Kurth Announces New Blog: C-Suite Compensation Center
Recently, Hunton Andrews Kurth launched a new blog, C-Suite Compensation Center. The blog will discuss compensation issues that are increasingly complex due to evolving laws, changing administrative rules and increasing shareholder activity.
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2018 Proxy Season Update
As the 2018 proxy season is winding down, some trends have begun to emerge regarding CEO pay ratio disclosure, shareholder proposals and virtual shareholder meetings.
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SEC Staff Permits Exclusion of Shareholder Proposal Under Economic Relevance Exception
At the end of February, the SEC staff issued a No-Action Letter permitting a company to exclude a shareholder proposal under Rule 14a-8(i)(5), often referred to as the economic relevance exception. This could have implications for other retailers seeking to exclude shareholder proposals under the rule in the future.
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Shareholder Activism at Retailers in 2018
Once the sole province of hedge funds and special interest groups, many mainstream institutional investors have now also embraced a more activist perspective with regard to their portfolio companies. Activist interest in prominent retailers show that the retail sector is not immune.
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Environmental Activist Submits Shareholder Proposal on Climate Control
Recently, the Securities and Exchange Commission allowed Apple Inc. to exclude a shareholder proposal from its proxy statement that requested that Apple “produce a report assessing the climate benefits and feasibility of adopting store-wide requirements for having all retail locations implement a policy on keeping entrance doors closed when climate control (especially air-conditioning during warm months) is in use.”
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SEC Staff Issues New Guidance on Shareholder Proposals
On November 1, 2017, the staff of the Securities and Exchange Commission issued Staff Legal Bulletin No. 14I, which provides additional guidance for public companies (including retailers) seeking to exclude certain shareholder proposals from their proxy materials.
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New York City Comptroller Launches Boardroom Accountability Project 2.0
On September 8, 2017, New York City Comptroller Scott Stringer and the New York City Pension Funds announced the second phase of their Boardroom Accountability Project, which will focus on board diversity and composition. Stringer sent a letter to the nominating and governance committee chairs of 151 portfolio companies held by the New York City Pension Funds, requesting board engagement regarding the director refreshment process and disclosure of a director qualification matrix that identifies directors’ relevant skills and experience and their gender and race/ethnicity. The list of companies included several major retailers and consisted of companies that have adopted proxy access in response to shareholder proposals from the NYC Pension Funds and those where the NYC Pension Funds’ proxy access proposals received majority support in 2017.
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Shareholders Show Strong Preference for Annual Say on Pay Votes
When say-on-pay was introduced under Dodd-Frank, there was a requirement that companies conduct say-on-pay frequency votes every six years for shareholders to decide whether say-on-pay votes should be held every one, two or three years. Companies first held say-on-pay frequency votes in 2011, so for many companies the 2017 proxy season is the first time that shareholders have revisited the matter since then.
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An Increasing Number of Proxy Challenges Focus on Equal Pay
As media outlets recently highlighted Equal Pay Day on April 4, 2017, publicly held retailers should be aware that the focus on pay equity is becoming increasingly popular among activist shareholders. This proxy season, more than 20 publicly traded companies are facing shareholder proposals at their annual meetings to vote on whether they should research and report on pay gaps by gender and race.
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