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CALIFORNIA CORPORATE & SECURITIES LAW

California And The “Entitled To Vote” Standard

Recently, I came across a proxy statement for a California corporation that stated the vote required for shareholder action on several proposals was “the affirmative vote of the majority of the shares represented at the Annual Meeting and entitled to vote on such matter”.  While this statement was consistent with the voting standard enunciated in…

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Continuing Confusion About Shareholder Approval Requirements

I continue to read confused statements in proxy statements about the vote required for shareholder action.  The default voting rule in Delaware is found in Section 216(2) of the Delaware General Corporation Law: In all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by…

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Simple Majority Voting And The Magna Carta

Some activists are continuing to submit stockholder proposals seeking the implementation of “simple majority voting”.  For example,  Morgan Stanley’s 2016 proxy statement includes the following proposal from Newground Social Investment, SPC: RESOLVED: Shareholders of Morgan Stanley hereby request the Board to take or initiate the steps necessary to amend the Company’s governing documents to provide that all non-binding matters presented…

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I Find More Confusion On Tallying Votes

I recently came across the following vote tally in Item 5.07 of Form 8-K: 73,197,209 votes for (28.9% of the voted shares) 177,776,280 votes against (70.2% of the voted shares) 2,113,797 abstentions (0.8% of the voted shares) 26,725,569 broker non-votes Item 5.07(b) requires disclosure of “the number of votes cast for, against or withheld, as…

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Those Who Hold Themselves Apart Seem To Be Getting All The Attention

Who knew that abstentions were so newsworthy?  Here are three recent news stories involving abstentions at annual meetings: Warren Buffett Defends Coca-Cola Abstention at Berkshire Meeting (May 3, 2014) CalPERS Shareowner Proposal Successful at Nabors Industries (June 3, 2014) Cheniere CEO Risks Losing $133 Million Amid Investor Suit (June 9, 2014) CalPERS’ shareholder proposal seems confused, misleading and internally…

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What Good Can Come From Letting The Indifferent and Undecided Hold Sway?

I’ve written many posts on the subject of voting because it seems so straightforward and yet turns out to be complex.  In tackling any voting problem, it is important to know and understand the applicable voting rule.  An example of a voting rule can be found in Section 708(c) of the California Corporations Code which prescribes the…

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Investor Voice May Rue Adoption Of Single Voting Standard

In yesterday’s post, I discussed why the Council of Institutional Investor’s blanket policy eschewing the counting of abstentions may be neither good nor legal.  CII, however, isn’t the only proponent of not counting abstentions.  As Broc Romanek reported in his Proxy Season Blog, a Seattle based group by the name of Investor Voice SPC is submitting shareholder…

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On Closer Inspection, This CII “Best Practice” May Be Neither Good Nor Legal

The Council of Institutional Investors has adopted what it describes as “a comprehensive body of corporate governance best practices”, including Policies on Corporate Governance.  I question, however, whether some of these policies really are “best practices” or even in conformity with applicable law. For example, the Section 3.7 of the CII’s Policies on Corporate Governance unequivocally, and without…

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Why Is There No Withhold Box?

The Securities and Exchange Commission has long required that a form of proxy relating to matters other than election to office provide a means to specify by boxes a choice between approval or disapproval of, or abstention with respect to, each separate matter to be voted on at the meeting.  Rule 14a-4(b)(1).  More recently, the SEC in…

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