About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

34 Yale J. Reg. Online 1 (2016-2017)

handle is hein.journals/jregb34 and id is 1 raw text is: What Shareholder Proposals on Proxy Access Tell Us About its Value Bernard S. Sharfman* Introduction Proxy access is the ability of certain privileged shareholders to have their own slate of director nominees included in the company's proxy materials whether or not the board of directors (Board) approves. These materials include a proxy statement used to solicit shareholder votes and a voting card allowing shareholders to vote without having to attend the annual meeting.' For many years, the default rules of corporate and securities law have provided the Board with exclusive authority to decide whether shareholder proposals seeking to implement proxy access are to be included in a public company's proxy solicitation materials. Five years ago the Securities and Exchange Commission (SEC) amended its rules to require these proposals be included.2 Because of the difficulty of crafting a binding proxy access bylaw within the confines of the SEC's 500 word limit on shareholder proposals,3 proposals are usually non-binding, requesting, not requiring, the Board to implement proxy access by amending the company's governing documents. These proposals can be understood as the first step in the process of implementing proxy access on a company-by-company basis. Roughly 200 companies received proxy-access proposals in 2016.4 The proposals usually limit the availability of proxy access to large shareholders who have held at least three percent of company shares, individually or as an aggregation of 20 to 25 investors, for at least three years. When voting on a proxy access proposal, shareholders need to be informed about the expected effect of proxy access on the market value of their shares. Boards also need to be informed about this expected change in value when considering if it should amend its governing documents to include proxy access, either for purposes of preempting a shareholder vote or considering its implementation subsequent to such a vote at the annual meeting. The SEC needs to be informed about the expected change in value on a market-wide basis prior to making any *Bernard S. Sharfman is an associate fellow of the R Street Institute and a member of the Journal of Corporation Law's editorial advisory board. Mr. Sharfman would like to thank Jonathan Cohn, Shane C. Goodwin, John G. Matsusaka, and Tara Bhandari for their helpful comments and suggestions. Mr. Sharfman is dedicating this article to his wife, Susan David, and his daughter, Amy Sharfman. 1 For a legal history of proxy access, see Bernard S. Sharfman, What Theory and the Empirical Evidence Tell Us about Proxy Access, 12 J.L. ECON. & POL'Y (forthcoming 2016). http://papers.ssrn.com/sol3/papers.cfm?abstract-id=2757761. 2 17 C.F.R. §240.14a-8(i)(8) (2011). ' 17 C.F.R. §240.14a-8(d) (2011). 4 SIDLEY AUSTIN LLP, PROXY ACCESS UPDATE - MOMENTUM CONTINUES TO BUILD IN 2016 4 (2016), http://www. sidley.com/-/media/update-pdfs/2016/09/proxy-access-momentum-in-2016--september-22-2016.pdf.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most