February 20, 2012
HP Agrees to Proxy Access
by Robert Kropp
The computer giant agrees to allow institutional investors meeting ownership thresholds to nominate
candidates for its Board of Directors.
Institutional investors advocating for proxy access—which would permit shareowners who have owned
at least three percent of a company for at least three years to have their nominees for boards of
directors included in corporate proxy materials—continue to wait for the Securities and Exchange
Commission (SEC) to propose a revised version of Rule 14a-11, which was struck down by the US Court
of Appeals in Washington DC last July.
In the meantime, they can take solace in
interim steps that occurred recently, as when Hewlett-Packard agreed to a shareowner request
submitted by Amalgamated Bank. Starting in 2013, HP will allow investors that have owned at least
three percent of a company for at least three years to nominate up to 20% of the company's board of
On his CorpGov.net
website, corporate governance advocate James McRitchie wrote, "The thresholds set far too high a
bar but it certainly represents a step in the right direction." In September, McRitchie told
SocialFunds.com that Rule 14a-8 offers smaller investors a more likely opportunity for proxy access
than Rule 14a-11.
"The barriers of Rule 14a-11 are arbitrary and capricious, especially
given the SEC’s longstanding requirement of $2,000 worth of shares held for one year to submit
shareowner proposals under Rule 14a-8," McRitchie said at the time.
The Wall Street
Journal reported that only four HP shareowners own at least three percent of the company's
Nevertheless, HP's agreement on proxy access is widely viewed as a major victory
for shareowner activists. If the management proposal supporting proxy access passes, then a
majority vote in favor of nominees proposed by shareowners will be binding.
Western Union retreated from its original request to the SEC that a resolution filed by a Norwegian
pension requesting proxy access be excluded from the proxy ballot.
After Norges Bank
Investment Management submitted a resolution requesting proxy access for investors who have owned
one percent of the company for one year, Western Union originally stated that a management proposal
would seek ownership thresholds of five percent for five years.
"In light of the
Company's plan to declassify its board and its ongoing assessment of whether 'proxy access' should
be included in the Company's corporate governance structure, the Company also announced that it no
longer intends to submit for stockholder vote at its 2012 annual meeting a management proposal to
implement a form of proxy access," Western Union stated.