A Delaware court ruled that a binding-bylaw proposal that would prohibit the company from seating any director who failed to achieve a majority vote in an uncontested election had to be included on the ballot at Trico Marine Corporation, despite the company’s contention that it would improperly usurp the authority of directors and would be illegal under Delaware law. (The court ruled that that matter would be decided separately, if the proposal received the votes required to pass it.) The proposal received over 62% of the votes in favor…but fell short of the 66.6% required to pass. Watch for additional proposals like this one, we predict – especially at companies that DO ‘hold over’ failing directors.
Ed Durkin, who heads up the governance efforts for the Carpenters Union says he plans to file shareholder proposals for a triennial say-on-pay vote at 20 companies this Fall - even though it’s late in the game…and maybe there will be Federal Say-On-Pay legislation no matter what. Actually, Ed makes some very good points: “Let’s try to make something out of this while there’s still time” he urged attendees at the Society’s annual conference in June. “People don’t have time to do an adequate analysis of corporate pay plans. We, for example, have 3700 companies in our portfolio.” And maybe his best point of all, he doesn’t want to make Risk Metrics even richer and more influential than ever – since voters will almost have to buy whatever check-the-box or black-box model they come up with in order to recommend an up or down vote on 8000 or so pay plans annually.
“Split votes” from co-fiduciaries crossed our path for the first time ever this year, and caused consternation at most tabulators, and for Inspectors of Election too, if they’re on their toes: The idea of having co-fiduciaries – each with a say on the same vote – seems a mighty dumb one to us, and one that mostly seems confined to the State of Ohio. We guess it popped up so often this year because fiduciaries of every stripe are increasingly purchasing voting advice – and increasingly, the advisors are giving divergent advice. So one fiduciary will vote NO on some directors - and maybe on some proposals too - while the other fiduciary will vote YES. One vote per share should count for Quorum purposes in these instances…but the votes will fall short vs. the quorum where the votes have been split, effectively cancelling each other out. We say, the proper way to report these votes is to have a column called “No Vote”…and that this column should also be used to hold the votes now called “broker non-votes” – inaptly we say. See our tabulation and reporting tips – and our article on Apple for more info on this.
Three instance where Risk Metrics changed its voting recommendations shortly before the meeting date also came to our attention this season; the first instances of this that we can recall. See our section on adjournments for more…
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