The Shareholder Proposals Most Likely to Pass

by Manhattan Institute for Policy Research for Boardmember, March 10th, 2011.

Shareholders – including labor unions and their pension funds, as well as individual shareholder activists are using the proxy process to affect corporate policy at every level, from social policy to executive compensation, but it is in proposing changes to the most mundane corporate governance rules where these groups are seeing real success.  In the third of his new findings for the shareholder proposal database, James Copland discovers proposals dealing with corporate governance issues are most likely to pass in comparison to other proposal types–having a 19 percent passage rate–and include proposals to separate the role of CEO and chairman as well as increasing shareholder voting rights.

By searching for all companies, industries and proponents by corporate governance on the ProxyMonitor database for the years 2008-2010, James Copland was able to uncover how past and present proposals on corporate governance and in particular, chairman independence suggest labor unions are using the proxy process strengthen the hand of labor over the hand of boards of directors.

Finding 1: Labor unions sponsored 58% of all chairman indepence proposals
Labor unions have supported shareholder proposals seeking to separate the chairman and CEO position.
Rate of Passage:

  • Only one proposal brought by the Services Employees International Union (SEIU) on chairman independence passed for the Bank of America in 2009.
  • Seven other such proposals received at least 40 percent of the shareholders’ votes.

Finding 2: 108 of the 198 proposals on corporate governance were sponsored by individual activisits or families
Individual activists have sought changes in corporate governance related to voting rules and shareholder action between meetings, but brought only one proposal for chairman independence. (continue reading… )



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