DISQUS

corpgov · 4 months ago

Nice letter. Excellent explanation of what happened at Yahoo. I hope proxy access changes boards as much as you seem to think it will. I'm still studying the proposal and think it needs a few tweaks. I'm concerned the threshold for small companies may be too high because they are unlikely to have institutional investors and these are the firms that haven't adopted majority voting standards and where governance usually needs the most improvement. I'd like to see any group of 100 shareowners be able to nominate, especially at small companies.

I like your idea of shareowners getting to choose between nominees from management and several types of shareowner nominees, plan b, c and d. I'd love to see required majority vote and instant runoff voting where voters could rank several candidates running for several specific slots. I've been trying to get this at CalPERS and think it will happen when there are state certified ballot counting machines. My guess is that something like this is probably a decade or so away at corporations.

I'm not sure I like the permanent limitation of 25% of the board. If shareowners nominated and elected 25% of the board last year but are still unhappy with the board, why shouldn't they get another shot at it? Maybe require subsequent runs to come from different groups? Still thinking about it. Not sure I like fist-in provision. Maybe it should be more like Private Securities Litigation Act of 1995, where that right goes to largest holder.

I'm not sure about the prohibition in proposed rule 14a-8(i)(8)(iii) against questioning the competence, business judgment or character of nominees or directors. Seems to me that to win the vote, you'd have to at least imply there is something wrong with the current board's business judgment. (Maybe I just need interpretation of this provision.) Similarly, subdivision (v) "Otherwise could affect the outcome of the upcoming election of directors." So, I guess this prohibits the group from also running a withhold campaign in the same year as proposing rules re future election?

I'm unclear re Schedule 14N where each reporting person states the percentage of stock they own and are instructed to round to the nearest 10th of a percent. Does this mean you can have 10 shareowners with 0.51% each to total 1%? I've got to go through and check if there is a firm date as to when valuation occurs. Otherwise, the company might be able to dilute their stock to disenfranchise the group.

ericjackson · 4 months ago

Thanks, Jim. I think you've identified some worthy points. Maybe I have low expectations but I'd like to see these amendments pass now and then be able to revisit these points in the future to hopefully take the ball further down the field. However, I don't disagree with anything you voiced support for.

corpgov · 4 months ago

Great - Yes, I agree it is critical to get it passed this year. I just
don't see it being revisited for years. Excellent comments though.

ericjackson · 4 months ago

You're probably right about that.

Tough call: push for perfect or accept good enough?