Shareholder Rights Project

September 2012

The Shareholder Rights Project (SRP) is a clinical program at Harvard Law School. The SRP works on behalf of public pension funds and charitable organizations seeking to improve corporate governance at publicly traded companies in which they are shareowners, as well as on research and policy projects related to corporate governance. Any views expressed and positions taken by the SRP and its representatives should be attributed solely to the SRP and not to Harvard Law School or Harvard University.

This newsletter reports on results already produced during the first 8 months of 2012 from about 90 shareholder proposals submitted by SRP-represented investors:

During the 2012 proxy season the SRP has been representing and advising 6 institutional investors — the Illinois State Board of Investment, the Los Angeles County Employees Retirement Association, the Massachusetts Pension Reserves Investment Management Board, the Nathan Cummings Foundation, the North Carolina State Treasurer and the Ohio Public Employees Retirement System — in connection with the submission of shareholder proposals to about 90 S&P 500 companies. The proposals were submitted to companies that had staggered boards at the beginning of the proxy season and urge a move to annual elections. The results of these proposals are further discussed below.

The benefits of proposals enabling shareholders to register their support for declassification, and of the SRP's work during the 2012 proxy season, are described in a New York Times DealBook column, entitled Giving Shareholders a Voice, by SRP director Lucian Bebchuk.

48 Agreements by S&P 500 Companies to Bring Management Proposals to Declassify

Through active engagement with S&P 500 companies receiving declassification proposals, the SRP and the institutional investors working with it have been able to reach negotiated outcomes with 48 companies receiving such proposals. These 48 companies have entered into agreements committing them to bring management proposals to declassify their boards. The 48 agreeing companies represent almost 40% of the S&P 500 companies that had staggered boards as of the beginning of this proxy season, and had an aggregate market capitalization exceeding half a trillion dollar as of September 1, 2012. A list of successful engagements is available here.

Click here to read the complete story.

27 Boards of S&P 500 Companies Already Declassified Following Agreements
with SRP-Represented Investors

Among those S&P 500 companies entering into agreements to bring management declassification proposals, board declassification has already taken place in 27 companies. In these companies, management proposals brought following agreements with SRP-represented investors have already been approved by shareholders, resulting in board declassification. The average level of shareholder support was 99.18% of votes cast and 80.71% of shares outstanding. A list of companies whose boards have been declassified following agreements with SRP-represented investors is available here. In addition to these 27 companies, agreed-upon management proposals to declassify are expected to go to a vote at a significant number of other S&P 500 companies pursuant to agreements with SRP-represented investors.

Click here to read the complete story.

38 Successful Precatory Proposals at S&P 500 Companies, with Average
Support Exceeding 80%

In companies where negotiated outcomes have not been obtained, precatory declassification proposals submitted by SRP-represented investors have so far gone to a vote at 40 companies and have won approval in 38 companies. The 38 successful proposals achieved average shareholder support of 82.41% of votes cast. These 38 successful proposals constitute over one-third of all shareholder proposals receiving majority support during the first eight months of 2012. A list of companies where shareholder declassification proposals submitted by SRP-represented investors obtained shareholder approval is available here. It is hoped that these companies will follow the strongly expressed preferences of their shareholders and bring management proposals to declassify to a vote at their 2013 annual meetings.

Click here to read the complete story.

Shareholder Rights Project

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