First 2012 Shareholder Proposal for Proxy Access

By Cydney Posner

The first announced shareholder proposal for proxy access for the 2012 proxy season has now been formally submitted, according to thecorporatecounsel.net blog, citing Insight, the ISS blog, citing information from U.S. Proxy Exchange, a group that purports to represent retail shareholders. (Who knew that proper attribution of sources could be so exhausting?) Remember that, since the SEC's proxy access rules were tossed out in court, private ordering is now the name of the game. (See my article of 7/22/11.) The shareholder proposal, based on a model form developed by U.S. Proxy Exchange members, was submitted on November 11 at MEMC Electronics by a long-time shareholder activist. The shareholder proposal is more permissive than the vacated SEC proxy access rule, which required that, to be eligible to make a nomination, a shareholder or shareholder group continuously hold at least 3% of the outstanding voting power for at least three years (both voting and investment power). In addition, a company would not have been required to include in its proxy statement more than one shareholder nominee or 25% of the company's board, whichever was greater. Under U.S. Proxy Exchange's revised model proxy access proposal, the eligibility threshold is lowered to (1) a shareholder or shareholder group that has continuously held at least 1% of the company's voting securities for at least two years, or (2) any group of shareholders, at least 100 of whom satisfy SEC Rule 14a-8(b) eligibility requirements ($2000 in market value or 1% of the voting securities, held for at least one year). Each eligible shareholder may make one nomination or, if greater, a number of nominations equal to 12% of the current number of board members, rounding down. Many commentators had assumed that we would not see any proxy access proposals until the 2013 proxy season but, apparently, that conclusion may well have been premature, and we could start seeing more proposals, based on this model or otherwise, in the near future.

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