US entourages from JPMorgan Chase to eBay have come under give someone notice from shareholder groups for trying to neuter a burgeoning campaign to confirm investor oversight of management.
A corporate governance movement to make it quieter for shareholders to call special meetings, by lowering the required level of investor stand up for, has gathered momentum in the past year.
But companies have begun quarrel back with what campaigners say amounts to a spoiler tactic objective to thwart their efforts. JPMorgan won support for the status quo in a contentious opinion earlier this week, and the issue is set for another showdown at eBay later this month.
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The faculty of shareholders to call special meetings is a powerful weapon for investors who homelessness to oust directors or force other changes at listed companies highest of the regular schedule of annual meetings.
While the right is exercised one rarely, campaigners say the mere threat can be enough to pressure companies to react to to investor demands. Examples include Allergan, where activist Tally Ackman demanded such a meeting during a hostile takeover dispute.
Shareholders have filed formal proposals to make it easier to ring up special meetings at a record 61 US-listed companies this year, according to the corporate governance consultancy ISS Corporate Infusions. Last year, 24 proposals were filed and attracted an unusually peak average shareholder backing of 42 per cent.
“It’s being watched closely,” said Peter Kimball, climax of advisory at ISS Corporate Solutions.
At JPMorgan, Kenneth Steiner — one of the most fecund sponsors of shareholder proposals — called on the bank to accede to future populars for a special meeting if 10 per cent of shareholders wanted one.
But the bank responded that “a tight minority of shareholders should not be entitled to utilise the mechanism of special junctions for their own interests” and also that there were “significant tariffs” associated with such events.
At its annual meeting in Texas this week, JPMorgan tried “ratification” of existing its rules, which require 20 per cent funds among shareholders before a special meeting can be held. By putting into view its own motion, the bank was able to omit Mr Steiner’s proposal from the ballot.
Similarly, the S&P 500 lender Major One put forward a proposal at its annual meeting earlier this month to ensure its existing rules, omitting a shareholder motion to lower the threshold.
The fellowship said that its own proposal provided “a more effective method to start further engagement on the topic of special meetings, rather than a desire support on the stockholder proposal”.
By pushing more radical shareholder proposals off the ballot, companies are open in “gamesmanship”, said Rosemary Lally of the Council of Institutional Investors, whose associates have combined assets of more than $3.5tr. “It’s not a very classless process when you do it that way.”
JPMorgan’s management proposal received 58 per cent shareholder funding and Capital One’s just over half — less support than is conventional for management proposals but enough to pass. ISS had recommended shareholders vote against the proffers at both companies.
“We asked our shareholders about a threshold that is at or disgrace than 400 of the S&P 500 companies,” a JPMorgan spokesman said. “Our shareholders have on the agenda c trick spoken with their vote.”
eBay is seeking ratification for its persisting 25 per cent threshold at its annual meeting in California on May 30. “The society believes that this management proposal is an effective means to relate stockholder viewpoints and engage with stockholders,” it said.
While shareholders experience the right to quiz management at annual meetings, campaigners point to tainted profile corporate problems such as Wells Fargo’s fake bank accounts smirch to argue that serious issues can emerge between the gatherings.
“They’re scarcely trying to thrown down a roadblock,” said John Chevedden, another shareholder campaigner who has put flip proposals to lower the threshold for special meetings. “Who’s the company to say you can’t vote for it this year?”
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