Energy firm to allow biggest investors to nominate corporate directors
General Electric has announced that it will allow its shareholders to suggest new nominees for its corporate board, becoming the latest in a number of companies to adopt proxy access reforms.
New bylaws, which GE says it will bring into effect from February 6, will allow a single shareholder ‒ or a group of up to 20 investors – that has owned more than 3 percent of the firm’s stock for longer than three years to nominate anything up to 20 percent of the board’s directors.
The move was disclosed in a filing with the SEC made this week. The US regulator is poised to hold a roundtable in the next few weeks to explore ways in which the proxy voting process might be improved, following instances such as the dispute between Whole Foods Market and shareholder James McRitchie over two competing proposals that would allow investors to nominate directors.
The SEC is also expected to reassess rules that would allow companies to exclude shareholder proposals if they are deemed too similar to those suggested by a company’s management.
‘In talking with many of our shareowners and as part of our annual governance review, we decided that implementing proxy access was appropriate at this time,’ writes Seth Martin, director of communications at GE, in an email message to investors. He adds that GE has ‘always emphasized shareowner accountability, and proxy access is another tool to provide that accountability.’
The move makes the US-based conglomerate the latest addition to a growing list of corporates that have adopted proxy access: Verizon did it last year, and Hewlett-Packard paved the way in 2013. Most recently, CF Industries Holdings disclosed its own adoption of the new bylaw in a regulatory filing last week.
According to ISS, at annual meetings in 2014 only 17 similar proposals were voted on and, of those, only six received majority approval. The proxy adviser also says, however, that shareholders have submitted 93 similar resolutions for 2015 annual meetings.
Earlier this month, pension fund CalSTRS announced several clarifications and amendments to its internal corporate governance principles, outlining its support for shareholders’ right to nominate new board candidates. Proxy adviser Glass Lewis also released a statement saying it would review proxy access proposals on a case-by-case basis during the current proxy season.