PROXY MONITOR REPORT

Winter 2014

Companies Fight Back Against Chevedden;
Unions and Social Investors Ramp Up Push on Corporate Political Spending

By James R. Copland


This report previews the 2014 proxy season, the period between mid-April and late June when most public companies hold annual meetings. In recent years, such meetings have witnessed an increase in shareholder activism, including, but not limited to, shareholder resolutions introduced on proxy ballots to be voted on by owners of companies’ shares. These shareholder resolutions have sought to: change board structure or other corporate-governance mechanisms; modify executive-compensation practices; or address a host of social and political issues (which may be of public import but for which the relationship to shareholder value would appear to be attenuated). The data informing this report have been collected through the Manhattan Institute’s ProxyMonitor.org online database, which catalogs shareholder proposals submitted to the 250 largest U.S. publicly traded companies by revenue, as ranked by Fortune magazine (see box below).

Part I of this report reviews the complete 2013 shareholder-proposal record, including submission trends, voting trends, proposal sponsorship, and proposal subject matter. Part 1 also contains a section focusing on corporate efforts to fight back against the most active sponsor of shareholder proposals, John Chevedden.

Part II of the report examines early shareholder voting results for companies holding annual meetings by March 10, 2014. It also highlights issues to monitor in the coming proxy season, including: board de-staggering proposals; proposals to separate corporate chairman and CEO positions; and proposals relating to corporate political spending or lobbying.

ABOUT PROXY MONITOR

The Manhattan Institute launched its Proxy Monitor project in 2011 to study shareholder resolutions on corporate proxy ballots, as well as shareholder advisory votes on executive compensation—then newly required for all publicly traded companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.[1] At the heart of the project is the ProxyMonitor.org online database, which contains information on all shareholder proposals on the proxy ballots of the 250 largest American companies by revenues, dating back to 2006, in addition to executive-compensation advisory vote totals. ProxyMonitor.org is the first publicly available, searchable resource of its kind.


I. LOOKING BACK: 2013 SHAREHOLDER-PROPOSAL RECORD

In 2013, the 250 largest American companies faced 306 shareholder proposals that made proxy ballots, a rate of 1.22 per company—unchanged from 2012. The number of shareholder proposals remained significantly below that witnessed in the five years through 2010, when Dodd-Frank’s rule mandating shareholder advisory votes on executive compensation meant that shareholders seeking that rule no longer needed to introduce such proposals.

In 2013, the average shareholder proposal at Fortune 250 companies received the support of 26 percent of shareholders—the lowest level since 2008. Only 7 percent of proposals received majority shareholder support—the lowest percentage in the ProxyMonitor.org database (dating back to 2006). Although the decline in vote totals and the percentage of shareholder proposals receiving majority support may be partly explained by large companies doing a better job in communicating to shareholders, it is also doubtless due in part to a shifting mix in shareholder-proposal types. The proposals most likely to receive majority support from shareholders have been those seeking to “declassify the board” (i.e., elect all directors annually) and those requiring directors seeking election to receive a majority (as opposed to plurality) of the shareholder vote. As such practices have become more commonplace among the largest companies, fewer companies among the data set of large corporations in ProxyMonitor.org are seeing such proposals. In addition, with the establishment of mandatory executive-compensation advisory votes under Dodd-Frank, such proposals—which tended to see relatively high vote totals in comparison with proposals concerning the environment, political spending, and other social issues—have shifted the mix of shareholder proposals away from those most likely to generate sizable shareholder votes.

Through all of 2013, such “social policy” proposals constituted a plurality of all proposals introduced on proxy ballots, at 41 percent. A majority of those involved corporate political spending or lobbying—at 21 percent of all proposals introduced last year, an all-time high. None of these social policy–related proposals received majority shareholder support; such proposals received just over 20 percent support from shareholders, on average.

In 2013, 39 percent of shareholder proposals on proxy ballots involved “corporate governance” questions, most frequently involving separating the company’s chairman and chief executive officer positions; allowing shareholders to act outside annual meetings through special meetings or by written consent; and modifying the company’s voting rules. Several of these proposals related to traditional corporate governance issues were likely to win significant shareholder support, including those seeking to elect the full board of directors annually (seven of eight such board-declassification proposals received majority support) and those seeking to eliminate all supermajority-voting requirements in the company’s bylaws (six of seven such “simple majority voting” proposals received majority support). Two (of seven) proposals seeking to require directors to obtain a majority vote for election received majority backing, as did two (of seven) seeking to allow shareholders to nominate their own directors on corporate proxy ballots (“proxy access”); two (of seven) seeking to allow shareholders to call special meetings; two (of 38) seeking to separate the company’s chairman and CEO positions; and one (of 20) seeking to permit shareholders to take action by written consent.

In 2013, 20 percent of all shareholder proposals on proxy ballots involved executive-compensation issues, most frequently involving equity compensation plans for management. The only such proposal to receive majority support was a compensation-clawback proposal at McKesson, which received 52 percent of the vote. Overall, proposals related to executive compensation received somewhat more support than those involving social or political concerns, at 26 percent.

In 2013, 39 percent of shareholder proposals on Fortune 250 companies’ proxy ballots were sponsored by individual investors; 35 percent by pension funds affiliated with multi-employer labor unions, or for state or municipal workers; 25 percent by social-oriented institutional investors created to invest with a social purpose, or affiliated with a religious or public policy organization; and 1 percent by other institutional investors. Two individuals and their family members and trusts—John Chevedden (see box below) and Kenneth Steiner—sponsored a majority of all shareholder resolutions proposed by individual investors, and 23 percent of shareholder proposals overall. (Among all other shareholder proposals sponsored by individual investors (16 percent of the total), 39 percent were introduced by just three more individuals: James McRitchie, Gerald Armstrong, and John Harrington.) Of the pension funds sponsoring shareholder proposals, the public-employee pension funds for New York State and City and the pension funds for the American Federation of Labor–Congress of Industrial Organizations (AFL-CIO) and the American Federation of State, County, and Municipal Employees (AFSCME) were most active. Catholic orders of nuns were also active in sponsoring shareholder resolutions. Among the many social-investing funds sponsoring multiple proposals, Northstar Asset Management was most active.

SPECIAL FOCUS: COMPANIES PUSH BACK AGAINST JOHN CHEVEDDEN

The most active sponsor of shareholder resolutions, John Chevedden has long been controversial among corporate leaders. Unlike billionaire activist investors such as Carl Icahn, who invests large sums in companies and seeks to turn their performance around, Chevedden, a 68-year-old retiree, takes advantage of the SEC’s low ownership thresholds—an investor must only hold $2,000 of a company’s shares for the preceding year to qualify for the proxy ballot under SEC rules[2]—to “scattershot” essentially identical shareholder proposals across a broad range of companies, intended to push companies broadly to adopt what the investor considers “best practice” in corporate governance. In early 2014, four companies—Chipotle Mexican Grill, EMC, Express Scripts, and Omnicom—each sued Chevedden in separate actions seeking to bar the investor’s proposals from the ballot.[3] Express Scripts won in Missouri district court, claiming that Chevedden’s proposal contained materially misleading statements. A New York court dismissed Omnicom’s case, arguing that the potential injury to the company from including Chevedden’s proposal was remote,[4] and a Massachusetts court dismissed EMC’s claim as moot in light of Chevedden’s agreement not to sue the company were it to fail to include his proposal on the ballot.[5] Although these are not the first lawsuits that companies have filed against Chevedden—Apache, KBR, and Waste Connections successfully sued to keep the investor’s proposals off their proxy ballots in previous years[6]—the large number of legal challenges in early 2014 may signal that companies are more willing to fight back against their most frequent shareholder-proposal antagonist.

Executive-Compensation Advisory Votes

As in 2012, only five Fortune 250 companies failed to obtain majority support in executive-compensation advisory votes in 2013. In addition to the four companies discussed in the 2013 Fall Report (Apache, Freeport-McMoRan, McKesson, and Navistar), the software company Oracle, meeting at the end of October, fell short of the majority threshold (at 43 percent shareholder support for its compensation package).


II. LOOKING AHEAD: 2014 EARLY RETURNS AND OUTLOOK

While most publicly traded companies hold their annual meetings between April and June, 21 Fortune 250 public companies had held annual meetings by March 15, 2014, and another 24 had filed proxy materials with the SEC as of that date (for meetings between mid-March and May 1). Thus, an early picture of the composition of the 2014 proxy season has begun to emerge.

Early Filing Data

The average Fortune 250 company filing proxy materials to date in 2014 has faced 0.98 shareholder proposals. Rather than indicating a decline in shareholder-proposal activity, this apparent drop-off is likely attributable to the mix of companies reporting, and it parallels early-year results from 2013.

The mix of shareholder proposals in the 45 Fortune 250 companies filing proxy materials by mid-March is roughly in line with that seen in 2013 and recent years, with a plurality of all proposals relating to social policy concerns. Some 20 percent of all proposals introduced to date have involved corporate political spending or lobbying, in keeping with 2012 and 2013 levels. The next-most-introduced class of proposals calls for separating the chairman and CEO roles, also in keeping with 2012 and 2013.

Among the early-filing companies, labor-affiliated pension funds and social-investing funds have been relatively less active than they were in all of 2013, sponsoring 18 percent and 15 percent of all proposals, respectively. Whether this constitutes a shift in strategy—or merely reflects that such investors are marshaling their resources for the full-blown proxy season—will be better answered after more corporate proxy ballots have been filed. Among the 64 percent of proposals sponsored to date in 2014 by individuals, two-thirds were sponsored by John Chevedden, Kenneth or William Steiner, James McRitchie, Gerald Armstrong, or John Harrington.

Early Voting Results

Even more than early filing results, the small sample of companies holding meetings through March 15—only 21 of 250 companies—makes conclusions on voting trends extremely tentative at this early date. Among the 14 shareholder proposals opposed by management and coming to vote at these 21 companies, two received majority support, with an average vote of 25.8 percent in favor—the last figure in line with 2013 results. The management-opposed proposals receiving the support of a majority of shareholders among early-meeting companies were a simple majority-voting proposal introduced by James McRitchie at Costco (65 percent) and a proposal seeking to permit shareholders to call special meetings, introduced by Kenneth Steiner at Applied Materials (55 percent). In addition, a poison-pill-redemption proposal at Navistar introduced by GAMCO Investments, the $30 billion non-socially-oriented fund of billionaire activist investor Mario Gabelli, received the backing of 92 percent of shareholders after management did not oppose the proposal.

Among proposals not receiving majority support are two different proposals at Emerson Electric relating to political spending and lobbying, which received 40 percent and 35 percent,[7] respectively. Although these votes are relatively high, they are hardly sufficient to indicate a trend: the other lobbying proposal coming to a vote to date, introduced by the National Center on Public Policy Research at Apple, received only 2 percent support. Also demonstrating the degree to which investors and proxy advisers consider the particulars of various proposal types under a common heading, as well as the companies involved, are the results of the two proxy-access proposals coming to a vote thus far in 2014: the proposal by the union-affiliated Change to Win (CtW) Investment Group at Walgreens received the support of 43 percent of shareholders, as opposed to only 4 percent support for James McRitchie’s proxy-access proposal at Apple.

Two proposals on proxy ballots were withdrawn before coming to a vote: an animal-rights-related proposal introduced by the social-investing fund Green Century Capital Management at Tyson Foods, calling for a report on the company’s use of gestation crates for pregnant sows; and billionaire activist investor Carl Icahn’s well-publicized effort encouraging Apple to increase its share-buyback program. (Tyson announced a significant effort to modify its pig-enclosure standards,[8] and Icahn adopted a more conciliatory approach with Apple’s management after several meetings.)[9]

A majority of shareholders approved of companies’ executive compensation in advisory votes, at each of the 21 Proxy Monitor companies to vote on the issue by mid-March. Support averaged 95 percent, and only one company, Navistar, saw support below the 85 percent threshold, with just under two-thirds of shareholders backing the company’s pay. (Navistar received less than 18 percent shareholder support for its executive compensation in 2013, after an aggressive push on the company by Icahn and Gabelli—so the 2014 support level looks as though the company has significantly turned the corner in most of its shareholders’ minds.)

What to Watch For

Board Declassification. The Shareholder Rights Project, a clinical program at Harvard Law School directed by law professor Lucian Bebchuk,[10] continues to press companies to elect all directors annually. In 2013, the project is working with five institutional investors—the Nathan Cummings Foundation and public-employee pension funds for Florida, Illinois, Massachusetts, and North Carolina[11]—to introduce proposals at 31 S&P 500 companies. At least seven of these 31 companies have decided to adopt board declassification on their own, and none of these companies are Proxy Monitor companies to have filed to date in 2014. The success of these efforts, however, bears watching. Such proposals in recent years have generated significant shareholder support, given the empirical evidence that annually electing all directors increases the viability of takeover threats,[12] adding to share value in cross-sectional empirical studies.[13] Yet new research indicates that for a broad data set of companies analyzed in time series, in non-takeover situations, “firms that adopt a staggered board increase in firm value, while de-staggering is associated with a decrease in firm value,”[14] which may, in turn, counsel that a case-by-case, as opposed to a one-size-fits-all, approach to board classification could be warranted.[15]

Splitting Chairman and CEO Roles. Although splitting the chairman and CEO roles is the second-most-introduced proposal type in 2014, four of the five proposals listed in company filings to date were introduced by individual investors (two by James McRitchie and one each by Gerald Armstrong and John Chevedden), and only one by a labor-affiliated pension fund (the AFL-CIO, at Bank of New York Mellon). Such a distribution is perhaps unsurprising in light of the overall skew to shareholder sponsorship among early-filing companies, but it may signal a shift in strategy for labor-affiliated pension funds after significant efforts to support “chairman independence” proposals in 2012 and 2013. (Such a shift may make sense, given that only two of 38 proposals of this type received majority shareholder support last year.) The forthcoming votes on proposals to split the chairman and CEO roles are:

  • March 19 (Starbucks)
  • April 8 (Bank of New York Mellon)
  • April 15 (U.S. Bancorp)
  • April 17 (PPG Industries)
  • April 23 (Coca-Cola)

Political Spending and Lobbying. If labor-affiliated funds may not be pushing as aggressively on the chairman-CEO issue in 2014, they—along with social-investing funds—are moving forward aggressively with proposals designed to increase the disclosure of, to limit, or to prohibit corporate political engagement. Such efforts are in keeping with recent trends and follow in the wake of the decision by the SEC not to take up a rulemaking proposal calling for a mandatory-disclosure rule at the regulatory level.[16]

Leading this charge is AFSCME,[17] which—as a labor union for public employees at the state and municipal levels—has an obvious interest in political concerns unrelated to share value, regardless of whether such interests are indeed motivating its efforts. Also taking a leading role in these efforts are New York state comptroller Thomas DiNapoli, a partisan elected official who is the sole fiduciary for New York’s massive pension fund covering many of New York’s state and municipal workers; and Walden Asset Management, a social-investing fund.[18]

In keeping with a shift observed in 2013,[19] these funds’ proposals are couched as relating to “lobbying,” as opposed to political spending. Such characterization seems odd, given that companies’ lobbying expenses are already mandatorily disclosed under federal law;[20] in essence, these proposals are designed to require companies to disclose dues paid to trade associations organized under Section 501(c)(6) of the Internal Revenue Code (including, prominently, the U.S. Chamber of Commerce) as well as to the American Legislative Exchange Council (ALEC), which is not a lobbying organization but rather a nonprofit organization organized under Section 501(c)(3), which votes on model legislation that friendly state legislators sometimes introduce.[21] (Given the well-publicized campaign against companies participating in ALEC in the wake of the George Zimmerman–Trayvon Martin murder trial—an ALEC committee had affirmed a “stand your ground” model bill, which, though not ultimately at issue in the trial, was publicly associated with Florida’s initial reluctance to prosecute Zimmerman[22]—as well as overt campaigns by Walden and New York officials to pressure companies to dissociate from the U.S. Chamber,[23] purportedly over the group’s opposition to cap-and-trade climate legislation, the objectives of at least some of the sponsors would seem to be to suppress corporate engagement with such groups, even if couched in shareholder-value rhetoric.)

Starbucks faces a proposal by John Harrington, seeking to prohibit the company from spending on politics, at its March 19 meeting. Five more companies (BB&T, Humana, IBM, Marathon Oil, and Newmont Mining) face proposals relating to the disclosure of political spending, lobbying, or 501(c)(3) contributions in the latter half of April.

A NOTE ON METHODOLOGY

In a September 2013 blog posting, Heidi Welsh of the Sustainable Investments Institute criticized the Proxy Monitor project for presenting “a skewed subset of the results” that “misses much of what happens in the U.S. proxy season.”[24] Welsh’s critique was, in essence, that Proxy Monitor data have a “big company bias”; that Proxy Monitor data fail to capture shareholder proposals withdrawn by the sponsor or excluded from corporate proxy ballots by companies after receipt of a “no-action letter” by the U.S. Securities and Exchange Commission (SEC); and that Proxy Monitor vote tabulations do not “use a consistent methodology, making apples-to-apples comparisons of voting results impossible.”[25]

Vote Tabulation.In determining shareholder support for shareholder proposals, the Manhattan Institute counts votes consistent with the practice dictated in a company’s bylaws, consistent with state law. Some companies measure shareholder support by dividing the number of votes for a proposal by the total number of shares present and voting, ignoring abstentions. Other companies measure shareholder support by dividing the number of favorable votes by the number of shares present and entitled to vote—thus including abstentions in the denominator of the tally. Neither practice necessarily skews shareholder votes in management’s favor: whereas the latter method makes it relatively more difficult for shareholder resolutions to obtain majority support, it also makes it more difficult for management to win shareholder backing for its own proposals, such as equity compensation plans.

Welsh, in keeping with other social-investing activists, including the Center for Political Accountability,[26] insists that shareholder votes on shareholder resolutions should be counted using the first methodology exclusively, irrespective of company bylaws. (Welsh’s preferred rule, conveniently for those in favor of socially oriented shareholder activism, inflates the apparent share of the vote in favor of shareholder resolutions.) As noted in detail in the Manhattan Institute’s fall 2013 Proxy Monitor Report, the social investors’ preferred counting methodology is inconsistent with federal securities law and state corporate law. The SEC’s Schedule 14A specifies that for “each matter which is to be submitted to a vote of security holders,” corporate proxy statements must “[d]isclose the method by which votes will be counted, including the treatment and effect of abstentions and broker non-votes under applicable state law as well as registrant charter and bylaw provisions"[27]—clearly indicating that corporations can adopt varying counting methodologies in assessing shareholder votes and that state substantive law governs the parameters of vote calculation.[28] Under the state law of Delaware, in which most large public corporations are chartered, “the certificate of incorporation or bylaws of any corporation authorized to issue stock may specify the number of shares and/or the amount of other securities having voting power the holders of which shall be present or represented by proxy at any meeting in order to constitute a quorum for, and the votes that shall be necessary for, the transaction of any business.”[29] Indeed, the default rule under Delaware law, absent a bylaw specification, is that “in all matters other than the election of directors,” companies should count “the affirmative vote of the majority of shares of such class or series or classes or series present in person or represented by proxy at the meeting,”[30]—the very voting rule that Welsh and other advocates would prefer that Proxy Monitor ignore.

Welsh argues that counting shareholder votes according to corporate bylaws makes “apples to apples” comparisons of votes impossible, but her preferred method of ignoring company bylaws to generate such apples-to-apples comparisons inaccurately skews shareholder votes such that shareholder proposals at some companies appear to have more support than they otherwise would. Companies’ methodologies for tabulating votes are transparent to investors; and the large, institutional investors that account for most shareholder voting abstentions surely are aware of the effects of their choice to abstain under a given company’s voting rules.

Excluded Proposals.Welsh is correct that the ProxyMonitor.org data set only includes shareholder proposals actually listed on corporate proxy ballots. Thus, as noted expressly in its fall 2013 report, Proxy Monitor data “present only a partial picture of shareholder-proposal activity because many shareholder proposals that are introduced never make it onto a proxy ballot.”[31] These ballot exclusions occur for two main reasons: (1) because the shareholder withdraws the proposal (often after some discussion or negotiation with the company); and (2) because the company excludes the item from the proxy (generally after receiving a letter from the SEC affirming essential agreement with the company’s position that the shareholder resolution is inconsistent with the agency’s rules and that the agency will take “no action” against the company for excluding it).[32]

Previous Proxy Monitor reports have attempted to account for these proposed resolutions that do not see the ballot. The fall 2013 report discussed at some length proposals excluded from the ballot after receiving a no-action letter from the SEC—noting that were such proposals counted, a larger percentage of shareholder proposals would be attributed to individuals. (Some 86 percent of shareholder proposals excluded after an SEC no-action letter were sponsored by individual investors who, for obvious reasons, are less likely to comply with SEC rules in submitting items than are institutional investors.) The winter 2013 report included a survey of corporate secretaries in an effort to measure all shareholder proposals, including those withdrawn by the sponsor and those omitted by the company. In general, the survey results showed that the number of shareholder proposals was approximately “77 percent more than actually appeared on proxy ballots in the ProxyMonitor.org database”;[33] to be sure, the share of companies deciding to negotiate with shareholder proponents may vary by sector, as Welsh asserts (an energy company is less likely to find common ground with many a sponsor of environmental proposals than other companies might, for instance). Nevertheless, the mix of shareholder-proposal types and shareholder-proposal sponsors in this survey broadly matched the mix found in the ProxyMonitor.org database. Moreover, the omission of proposals from proxy ballots does not skew voting results, as shareholders vote only on proposals actually on the ballot.

Company Size.Welsh is correct that because the ProxyMonitor.org database is limited to the 250 largest companies by revenues, the Proxy Monitor data omit, for instance, the “9 percent [of proposals] that went to Mid-Cap 400.”[34] These omissions do mean that Proxy Monitor data do not capture the complete picture of all shareholder activism; but from the standpoint of the average shareholder—as opposed to the socially oriented shareholder activist—focusing on the largest companies makes sense, given that these companies encompass the majority of holdings for most diversified investors in the equity markets. Moreover, in terms of counting shareholder votes, the Proxy Monitor data set presents a significantly more accurate picture than the vote tallies of shareholder activists who straight-line-average votes across a much larger data set of companies, without regard to market capitalization. Thus, the omission of votes at smaller companies does introduce some bias into Proxy Monitor assessments of shareholder sentiment, but far less so than a methodology that weights a shareholder vote at a small-cap company as equivalent to a shareholder vote at Apple—which is not, as it were, “apples to apples.”

ENDNOTES

  1. Pub. L. No. 111-203, 124 Stat. 1376 §951 (2010) [hereinafter Dodd-Frank Act]; 17 C.F.R. § 229.402 (2011).
  2. See 17 C.F.R. § 240.14a-8 (2007) [hereinafter 14a-8]. 
  3. See, e.g., Andrew Ackerman, Corporations Take Swats at a Gadfly, Wall St. J., March 12, 2014, available at http://online.wsj.com/news/articles/SB10001424052702303546204579435512380561526?mod=vocus; Ning Chiu, Fifth Circuit Upholds Decision Against Chevedden as More Companies Seek 14a-8 Relief from Courts, Davis Polk & Wardwell LLP, Feb. 18, 2014, available at http://www.davispolk.com/briefing/corporategovernance/fifth-circuit-upholds-decision-against-chevedden-more-companies-seek/; Waste Connections, Inc. v. Chevedden, No. 4:13-CV-00176 (S.D. Tex. June 3, 2013), aff’d, No. 13-20336, 2014 WL 554566 (5th Cir. Feb. 13, 2014), http://www.gpo.gov/fdsys/pkg/USCOURTS-ca5-13-20336/pdf/USCOURTS-ca5-13-20336-0.pdf.
  4. See James McRitchie, Omnicom (OMC) Group Loses to Chevedden: Shareholder Rights Preserved, Corporate Governance, March 12, 2014, available at http://corpgov.net/2014/03/omnicom-omc-group-looses-to-chevedden.
  5. See Ross Kerber, U.S. courts dismiss two suits against shareholder activist Chevedden, Reuters, March 11, 2014, available at http://www.reuters.com/article/2014/03/12/us-omnicom-group-emc-corp-shareholders-idUSBREA2B04C20140312.
  6. See Ross Kerber, SPECIAL REPORT-Economy-class activist investor crashes the corporate party, Reuters, Oct. 23, 2013, available at http://www.reuters.com/article/2013/10/23/activist-chevedden-special-idUSL1N0HY15B20131023.
  7. The Center for Political Accountability, a group headed by former Democratic Congressional staffer Bruce Freed that aims to increase corporate disclosures of various types of political engagement, reported Emerson’s basic political spending proposal as receiving 47.38 percent support, as opposed to the 40.06 percent support actually received—thus highlighting the extent to which various activists’ refusal to count shareholder votes as specified in company bylaws can inflate apparent vote totals. See Center for Political Accountability, 2014 Transparency and Accountability Reports, http://www.politicalaccountability.net/index.php?ht=d/sp/i/1795/pid/1795; see also discussion in “A Note on Methodology,” infra.
  8. See James Andrews, Smithfield, Tyson Encouraging Transition Away From Gestation Crates, Food Safety News, Jan. 10, 2004, available at http://www.foodsafetynews.com/2014/01/smithfield-tyson-to-make-distance-from-gestation-crates/#.Uycml29OXIU.
  9. See Gene Marcial, What’s Up With Carl Icahn’s About-Face On Apple, Forbes Magazine, Feb. 14, 2014, available at http://www.forbes.com/sites/genemarcial/2014/02/14/whats-up-with-carl-icahns-about-face-on-apple/.
  10. The President and Fellows of Harvard College, Shareholder Rights Project, http://srp.law.harvard.edu/.
  11. The President and Fellows of Harvard College, SRP-Represented Investors, http://srp.law.harvard.edu/clients.shtml.
  12. See Lucian A. Bebchuk, Alma Cohen & Charles C.Y. Wang, Staggered Boards and the Wealth of Shareholders: Evidence from Two Natural Experiments (Nat'l Bureau of Econ. Research, Working Paper No. 17127, June 2011), available at http://www.nber.org/papers/w17127.
  13. See, e.g., Gabriel Hawawini and Donald B. Keim, The Cross Section of Common Stock Returns: A Review of the Evidence and Some New Findings, The Wharton School at the University of Pennsylvania, May 14, 1998, available at http://finance.wharton.upenn.edu/~rlwctr/papers/9908.pdf; N. Theriou, P. Chatzoglou, D. Maditinos, and V. Aggelidis, The Cross-Section of Expected Stock Returns: An Empirical Study In the Athens Stock Exchange, Democritus University of Thrace, July 2003, available at http://abd.teikav.edu.gr/articles_th/cross-section1.pdf.
  14. Martijn Cremers, Lubomir P. Litov, and Simone M. Sepe, Staggered Boards and Firm Value, Revisited, Social Science Research Network, Dec. 19, 2013, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2364165.
  15. See Stephen Bainbridge, Is the Harvard Shareholder Rights Project Attack on Staggered Boards Misguided?, Professor Bainbridge, Jan. 14, 2014, available at http://www.professorbainbridge.com/professorbainbridgecom/2014/01/is-the-harvard-shareholder-rights-project-attack-on-staggered-boards-misguided.html.
  16. See Alex Baumgart, SEC Drops Political Spending Disclosure from 2014 Agenda, OpenSecrets.org, Dec. 3, 2013, available at http://www.opensecrets.org/news/2013/12/sec-drops-political-spending-disclo.html ; also see The Committee On Disclosure Of Corporate Political Spending, Petition for Rulemaking, Aug. 3, 2011, available at http://www.sec.gov/rules/petitions/2011/petn4-637.pdf; also see James R. Copland, Against an SEC-Mandated Rule on Political Spending Disclosure: A Reply to Bebchuk and Jackson, 9 Harv. Bus. L. Rev. 901, n.54 (2013), available at http://www.hblr.org/wp-content/uploads/2013/10/HLB209 crop.pdf.
  17. Press Release, AFSCME, Institutional Investors Press Companies for Disclosure of Lobbying in 2014, Feb. 18, 2014, available at http://www.afscme.org/news/press-room/press-releases/2014/institutional-investors.
  18. See Carly Greenberg, Research and Engagement in Action, Summer 2013, available at http://www.waldenassetmgmt.com/News/Newsletters/2013/Summer/article-4.
  19. See James R. Copland, Proxy Monitor 2013: A Report on Corporate Governance and Shareholder Activism, (Manhattan Inst. For Pol’y Res., Fall 2013), available at http://www.proxymonitor.org/pdf/pmr_06.pdf.
  20. Lobbying Disclosure Act of 1995, Pub. L. 104-65, Dec. 19, 1995, 109 Stat. 691.
  21.  See AFSCME, supra note 17.
  22. See John Nichols, How ALEC Took Florida’s ‘Licence to Kill’ Law National, The Nation, March 21, 2012, available at http://www.thenation.com/blog/166978/how-alec-took-floridas-license-kill-law-national.
  23. See Sustainable Business, Investors Urge GM, Boeing, Xerox to Quit Chamber of Comm., SustainableBusiness.com News, Oct. 15, 2009, available at http://www.sustainablebusiness.com/index.cfm/go/news.display/id/19061; also see Jon Entine, Why Climate Change Legislation Is Turning Corporate America Green, Forbes Magazine, Oct. 2, 2009, available at http://www.forbes.com/2009/10/02/climate-change-legislation-environment-opinions-contributors-waxman-markey.html.
  24. Heidi Welsh, Accuracy in Proxy Monitoring, HLS Forum on Corporate Governance and Financial Regulation, Sept. 16, 2013, https://blogs.law.harvard.edu/corpgov/2013/09/16/accuracy-in-proxy-monitoring-2/.
  25. Id.
  26. See Center for Political Accountability, Reality Check on Arguments against Corporate Political Accountability and Disclosure, May 8, 2013, available at http://www.politicalaccountability.net/index.php?ht=a/GetDocumentAction/i/7828.
  27. General Rules and Regulations promulgated under the Securities Exchange Act of 1934, Schedule 14A Information, Item 21, Voting Procedures (University of Cincinnati College of Law), available at http://taft.law.uc.edu/CCL/34ActRls/rule14a-101.html (last visited March 22, 2014).
  28. See id. Ms. Welsh correctly notes that the SEC staff counts “[o]nly votes for and against a proposal are included in the calculation of the shareholder vote of that proposal,” ignoring abstentions, SEC Staff Legal Bulletin No. 14, F.4., July 13, 2001, available at http://www.sec.gov/interps/legal/cfslb14.htm (last visited March 22, 2014), for the very limited purpose of determining whether a proposal has met the “resubmission threshold” to qualify for inclusion on the next year’s corporate ballot—a permissive standard requiring merely a minimum 3 percent, 6 percent, or 10 percent vote, respectively, in successive years; also see Amendments to Rules on Shareholder Proposals, Exchange Act Release No. 40,018; 63 Fed. Reg. 29,106, 29,108 (May 28, 1998) (codified at 17 C.F.R. pt. 240), http://www.sec.gov/rules/final/34-40018.htm#foot9 (“If the proposal deals with substantially the same subject matter as another proposal or proposals that has or have been previously included in the company’s proxy materials within the preceding 5 calendar years, a company may exclude it from its proxy materials for any meeting held within 3 calendar years of the last time it was included if the proposal received: (i) Less than 3% of the vote if proposed once within the preceding 5 calendar years; (ii) Less than 6% of the vote on its last submission to shareholders if proposed twice previously within the preceding 5 calendar years; or (iii) Less than 10% of the vote on its last submission to shareholders if proposed three times or more previously within the preceding 5 calendar years.”). As noted in the 2013 Fall Report, “[t]here are many reasons why the SEC might choose to follow a single ballot-counting standard [for such limited purpose,] including reducing workload in processing 14a-8 no-action petitions and adopting a permissive standard for ballot inclusion, given shareholders’ ability to reject proposals previously voted down by large margins.” In any event, the SEC staff’s resubmission-threshold vote-counting rule for shareholder proposals does not dictate proxy-ballot counting more broadly, and such votes remain functions of corporate bylaws as governed by state corporate law.
  29. Del. Gen. Corp. L. § 216.
  30. Id. at 216(4).
  31. See Proxy Monitor Fall 2013, supra note 19.
  32. 14a-8. See, e.g., Amy Goodman, SEC Grants Request to Exclude Rule 14a-8 Shareholder Proposal, HLS Forum on Corporate Governance and Financial Regulation, Oct. 12, 2013, available at https://blogs.law.harvard.edu/corpgov/2013/10/12/sec-grants-request-to-exclude-rule-14a-8-shareholder-proposal/#more-53586; James Morphy, SEC Permits Exclusion of Most Common Proxy Access Proposal, HLS Forum on Corporate Governance and Financial Regulation, March 27, 2012, available at https://blogs.law.harvard.edu/corpgov/2012/03/27/sec-permits-exclusion-of-most-common-proxy-access-proposal/#more-27042.
  33. James R. Copland, Proxy Monitor 2013: Political Spending, Say on Pay, and Other Key Issues to Watch in the 2013 Proxy Season, 6 (Manhattan Inst. for Pol’y Res., Winter 2012), available at www.proxymonitor.org/forms/pmr_05.aspx.
  34. See Welsh, supra note 24.
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