New York City comptroller Scott Stringer last week issued a report stating that more than 440 US companies, including more than 60 percent of the S&P 500, have enacted proxy access rules – underlining the success investors have had in pushing for governance standards rarely implemented a few years ago.
By contrast, only six US companies had ‘meaningful proxy access’ in 2014, according to a note accompanying Stringer’s report.
Stringer serves as the investment adviser to and custodian and a trustee of the New York City Pension Funds. According to the report, these funds for the 2017 proxy season submitted proposals to 71 companies seeking proxy access. Fifty-one companies responded to these proposals by ‘enacting meaningful proxy access,’ officials write in a note accompanying the report.
Not all companies were keen to adopt such measures, but investors have pushed for changes at AGMs. For example, Kinder Morgan’s stockholders voted at the May 2017 annual meeting to adopt a proxy access bylaw – a move the energy infrastructure company’s board of directors had urged them to reject.
The proposal, which received 58.2 percent of the votes cast, came from Stringer on behalf of the city’s five public pension funds. Specifically, the proposal called for the adoption of a bylaw that would limit the number of shareholder-nominated candidates appearing in proxy materials to the larger of two or one quarter of the directors then serving.
Those making director nominations would, among other things, have to have owned 3 percent or more of Kinder Morgan’s stock for at least three years and would have to give the company certain information about the nomination, as dictated by SEC rules.
A few days earlier, IBM’s stockholders voted by 59.4 percent to 40.6 percent to adopt a proxy access bylaw proposal from Stringer, again despite the urging of the board.
‘Just three years ago, we launched a nationwide campaign to change the rules of the road for director elections,’ Stringer says in a statement. ‘Today, for the first time, investors in hundreds of the largest US companies have a meaningful voice to ensure boards are diverse, climate-competent, independent and accountable.’
Stringer and the New York City Pension Funds began pushing for proxy access following the overturning in court of the SEC’s universal proxy rule.
Among other things, the comptroller’s paper reports that, in response to a new initiative launched last year, seven of 10 major healthcare and insurance companies targeted by the New York City Pension Funds agreed to disclose information on how they address gender pay equity.