This post provides an updated overview of the outcomes resulting from the work by the American Corporate Governance Institute (ACGI) during the 2011 proxy season to contribute to moving S&P 500 companies toward board declassification. During the 2011 proxy season the ACGI represented and advised two institutional investors, the Florida State Board of Administration (SBA) and the Nathan Cummings Foundation (NCF), in connection with the submission of shareholder declassification proposals. In addition to the results described in an earlier post, we were pleased by subsequent developments in two companies:
- Thermo Fisher Scientific Inc. (TMO): Following a vote at the 2011 annual meeting in which 87% of the shareholder votes cast were in favor of the SBA’s declassification proposal, the board of directors amended the company’s bylaws to declassify the board. Starting at the 2012 annual meeting, directors will be elected for one year terms, with the entire board serving one-year terms from the 2014 annual meeting.
- eBay Inc. (EBAY): Following the submission of a proposal by the NCF, negotiations between eBay (represented by Wachtell Lipton) and the NCF (represented by the ACGI) produced an agreement pursuant to which the company committed to complete a full review of declassifying the board of directors and moving to annual elections of all directors. Following the completion of the review, the company announced that it will bring a management proposal to declassify the board for a vote at the 2012 annual meeting.
With these developments, the ACGI’s work during the single 2011 proxy season has contributed to (i) eight companies which have already declassified, (ii) seven companies which have already committed to bring a management declassification proposal at their 2012 meeting, and (iii) eight companies which have yet to respond to the substantial shareholder majority votes in support of declassification at their 2011 annual meetings, as described below.