Proxy Access 2016 – Market Trends and Shareholder Proposal Developments; Analysis of Terms Adopted Since August 1, 2015 and Key Elements of Shareholder Proposals for the 2016 Proxy Season

Sullivan & Cromwell LLP - November 10, 2015

As companies prepare for the 2016 proxy season, the number of adopted proxy access bylaws has almost doubled in recent months and at least two new forms of proxy access shareholder proposals have appeared.  On the company side, proxy access bylaws adopted since August 1, 2015 confirm the market trend toward a 3% ownership  threshold, 3 year holding period, 20% nomination limit and 20 member group limit.  Trends for ancillary provisions also have coalesced to a significant extent.  On the shareholder-proponent side, James McRitchie, a frequent filer of shareholder proposals and advocate for the proxy access movement, has published two new forms of proxy access shareholder proposals. One of them targets the elimination of provisions in existing proxy access bylaws that have been opposed by the Council of Institutional Investors, and the other builds on the standard proposal seeking proxy access by limiting ancillary features that are commonly included in adopted proxy access bylaws.  This memorandum summarizes key trends in proxy access bylaw provisions adopted since August 1, 2015, discusses the key elements of the two new forms of proxy access shareholder proposals and outlines possible approaches that issuers may consider taking in response to the receipt of a shareholder proposal.