Frequently Asked Questions
What is the status of Proxy Access?
When the SEC decided not to appeal the ruling by the U.S. Court of Appeals in Washington relative to federally mandated Proxy Access, it let its previous stay on amendments to Rule 14a-8 expire, thus allowing for shareholder proposals on Proxy Access in 2012. As a result, private ordering has begun, and as of early January, 2012 Proxy Access proposals have already been submitted at sixteen companies. Four different versions of Proxy Access proposals have been filed and include both binding and non-binding proposals.
(For additional information on Proxy Access, please see our Proxy Update which can be viewed here).
Does my company need to change its compensation practices in response to the 2011 Say on Pay vote?
The answer to this question will depend on the particulars of the vote, especially the level of opposition to the proposal. The proxy recommendation firms have set policies as to what level of opposition they would consider troublesome and require action by the company, ISS policy notes that a 30% against vote is of concern and Glass Lewis states that 25% if the line in the sand. Though for some institutions, a lower level of opposition in the 15% to 20% range may be considered problematic. In any case, the response must be looked at in a holistic context of the company’s governance practices and performance.
Is our Board at risk of a substantial vote against one or more Directors?
The answer requires a thorough review of prior elections, key corporate governance issues, and knowledge of a company’s shareholder profile. Not only do we answer this question for clients, but we provide a customized plan to prevent putting directors at risk.
What is behind the trading of our stock?
The answer requires intelligence gathering to properly identify shareholders and significant position changes. Morrow has been providing strategic shareholder surveillance since 1980, longer than any other firm. We can provide the most accurate profile of shareholders in the industry, and as part of our active surveillance program, we provide insight into trading anomalies and share movements based on fundamental, bottom-up analysis.
How can our Board accurately forecast the expected vote on Directors and other proposals well in advance of our shareholder meeting?
The critical first step that enables vote forecasts is an in-depth shareholder identification program done by Morrow's dedicated shareholder surveillance group. Once that process is complete, the results are analyzed by our Corporate Governance Consulting team for a thorough review of the institutional shareholders and how they have typically voted in previous similar circumstances.
What is the real influence that ISS and Glass Lewis have on our institutional shareholders?
The influence of the proxy advisory groups will depend on the issue and your particular shareholders. As part of our service we will analyze your entire shareholder profile, determine the likely recommendations of the proxy advisory services on the particular voting issues, provide suggestions to make changes to the proposal if necessary, and track the voting of institutions. Ultimately, we make a comprehensive evaluation of the shareholder base, which allows us to focus on helping management pass the proposals, not just gain the recommendation of a particular advisory firm or the vote of a specific institution.
Who makes the voting decision for our major institutional shareholders?
There is no standard answer – each institution is different. But, after years of interaction – we have the relationship and knowledge to answer this question for nearly all major institutional shareholders.