I’ve blogged a few times about how the SEC Chairman Paul Atkins has delivered a speech in which he stated that one of his top priorities is to make being a public company an attractive proposition, with eliminating precatory shareholder proposals being one of the goals. In the speech, Chairman Atkins indicated that there’s no firm basis under Delaware law for a shareholder right to submit non-binding proposals and that if a “company obtains an opinion of counsel that the proposal is not a ‘proper subject’ for shareholder action under Delaware law, this argument should prevail, at least for that company. I have high confidence that the SEC staff will honor this position.”
If investors seek to pressure a company about something, how might they go about it without the ability to submit non-binding shareholder proposals? One avenue would be to launch a ‘just vote no’ campaign against one – or more – directors that are up for election. These campaigns historically pale in number in comparison to the number of shareholder proposals submitted to companies each year.
But perhaps the number of ‘vote no’ campaigns will rise going forward as they could touch on the same issues typically raised in shareholder proposals. ‘Vote no’ campaigns are more personal to directors – and often foretell more activist activity in its aftermath if the campaign is considered a success by the proponent. So the stakes are higher.
And Diligent has reported that this type of campaign is up 40% compared to a year ago already…
Authored by
Broc Romanek