Proxy adviser says ‘significant, long-term’ shareholders should have proxy access
Glass Lewis says ‘significant, long-term’ shareholders should be able to nominate representatives to the boards of companies they invest in. It also says it will review proxy access proposal requests on a case-by-case basis in 2015.
About 100 US companies face shareholder proposals in 2015 that would allow ‘certain large, long-standing shareholders’ to nominate directors to a board without a typical proxy contest, Glass Lewis says on its corporate blog. Most come from New York City’s pension funds after the New York Comptroller announced a campaign late last year to submit proxy access proposals at 75 companies.
‘Significant, long-term shareholders should have the ability to nominate their own representatives to the board,’ Glass Lewis writes. ‘Nevertheless, given that contested director elections are distracting and potentially disruptive to a company, its board and management, Glass Lewis believes it is therefore reasonable that the exercise of the proxy access right be subject to certain minimum ownership thresholds and holding periods as well as limitations [regarding] the number of directors nominated through proxy access.’
Glass Lewis does not outline the minimum ownership thresholds it would support but says it will ‘continue to review each proxy access proposal, along with the company’s response, on a case-by-case basis.’ The firm also predicts that shareholders will rarely invoke their proxy access right, and be even more rarely successful because victory requires support by a majority of shareholders or, in the case of contested elections, a plurality.
Last week, the Wall Street Journal reported that Glass Lewis was considering recommending that shareholders vote against company-backed board candidates if a company countered a shareholder proposal for proxy access with its own ‘diluted alternative’.
