November 7, 2014
By Amanda LoMonaco
New York, NY – On Thursday November 6th, New York City Comptroller Scott M. Stringer, announced an initiative to give shareowners the right to nominate directors at U.S. companies using the corporate ballot. By submitting proxy access shareowner proposals to 75 companies at once, the New York City Pension Funds are taking a major first step to roll out proxy access across the market.
The resolutions, known collectively as the Boardroom Accountability Project, seek to give shareowners a choice in the election of directors of publicly held companies.
“The Boardroom Accountability Project is a national movement to systematically improve the responsiveness of corporate boards to shareowners,” Comptroller Stringer said. “The current election procedures for most corporations would make Boss Tweed blush. We are seeking to change the market by having more meaningful director elections through proxy access, which will make boards more responsive to shareowners. With this right in place, we expect to see better long-term performance across our portfolio.”
Proxy access is the ability for shareowners to nominate directors to run against a company’s chosen slate of director candidates on the corporate ballot. Currently, CEOs and/or directors pick nominees — often themselves — for election, and the shareowners’ right to nominate directors to run against these individuals is largely illusory. Because corporate directors are generally elected by a plurality of votes in uncontested elections, a director who owns one share of a company can re-elect his or her self, even if every other shareowner votes against that person. Of 41 directors who failed to receive majority votes in 2014, 40 remain on the board as “zombie directors,” unelected but still serving.