The next three or four weeks could give some insight into next year's proxy season
Dear readers,
Worried about what is going to happen during the main proxy season next year? Concerned about shareholder attitudes and the hot-button issues for activists? What will institutional investors support? Of course you are. Everyone at public companies is thinking about it.
Well the next three or four weeks will give you a very good insight into some of these questions. We are in for a big month for public company boards. There are approximately 250 companies holding annual meetings in the coming month, and while most will be relatively routine, there are some contentious votes.
Perhaps the biggest fight is for control of beleaguered book retailer Barnes & Noble. Billionaire investor Ron Burke is running a high-profile, and increasingly personal, fight against company founder and board member Len Riggio. The accusations and counter claims are flowing thick and fast, and from what I can tell, the vote – Burke is trying to oust Riggio and two other directors – is going to be close. Not as close as it might have been, though. A few weeks back Riggio exercised almost $17 million in options – giving him over 900,000 more shares to vote at the meeting. This also means he will not have to exercise the poison pill – a move that would endanger the support of ISS and other proxy advisors. It is a clever move, if not a particularly ethical one. But they are his options so he can do with them what he pleases. Keep that in mind if your board faces this type of challenge.
Later today shareholders at Airgas will be voting on Air Products & Chemicals' hostile bid for the company. Again, three directors are in the firing line. Many pundits are predicting success for Air Products, although it is far from a foregone conclusion.
Merger activity aside, a bunch of other big companies are hosting meetings including Nike, General Mills, National Semiconductor, Conagra, Symantec and Sara Lee. None of these companies have shareholder proposals and they should all enjoy relatively routine meetings.
But for a window into investor attitudes, look to FedEx, Proctor & Gamble, NewsCorp, Oracle and Cardinal Health. All of these boards are fighting shareholder proposals ranging from CEO succession planning, separation of board chair and CEO, cumulative voting, say on pay and the formation of various specialty board committees including a human rights committee at NewsCorp, and a sustainability committee at Oracle.
Compensation-related proposals are up for vote at a number of companies so keep a close eye on these fights to figure out what is likely to happen in 2011. From what I hear independence of the chairman is still not seeing overwhelming support, or much support at all from institutional investors, so don’t be surprised if these proposals don't pass. Say on pay and some of the pay-for-performance measures are a different story. I get the feeling companies are going to have a hard time garnering the support they need to overturn such proposals.
But don’t take my word for it. In a month we will know where things are heading. This information could prove highly valuable when it comes to planning for the major votes in 2011. For those not hosting meetings I suggest sitting back and taking notes.
Please send me your thoughts and comments on these or any other topics.
Brendan Sheehan
Executive editor
Corporate Secretary
