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CALIFORNIA CORPORATE & SECURITIES LAW

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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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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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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Was Your Option Plan Approved? Corporate Law May Say “Yes”, But The Securities Law May Say “No”

On Friday, I’ll be part of a panel at the National Association of Stock Plan Professionals‘ 19th Annual Conference.  My topic will be devoted to the question “Did it pass?”.  Here’s a brief preview of some of the subtleties in this question. California law requires shareholder approval of compensatory option or security purchase plans when:…

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