SEC's White Urges Boards to Pay Attention to Shareholder Proposals

WASHINGTON (The Deal) -- Securities and Exchange Commission chairwoman Mary Jo White late Monday urged directors of corporate boards to pay close attention to nonbinding shareholder proposals coming up for a vote at their firms, whether they are approved by a majority of investors or not.

"Look thoughtfully the proposals shareholders are submitting to your company," White told directors at a forum sponsored by the Stanford University Rock Center for Corporate Governance. "Ask your management team about them and about the proposals that other companies are receiving that could be relevant to your company. Look at the voting results at shareholder meetings - the percentage of votes for a shareholder- supported resolution or against a management-supported resolution are important, irrespective of whether the resolution is approved, or not."

White's comments come as the number of nonbinding proposals being considered by corporations related to a wide variety of social and economic areas has grown. And while the proposals cover a wide variety of subject matters, some are key precatory measures on executive pay packages and others seek to have corporations consider strategic options such as a sale often have received the support of a majority of investors.

According to a June 18 update to a report issued by Semler Brossy Consulting Group, as of June 18, 47 companies of more than 2000 corporations the consulting group has tracked so far have failed to have their executive pay packages approved by shareholders so far this year. The "say on pay" votes are nonbinding and were required by the Dodd-Frank Act, written in the wake of the financial crisis.

Last year in May more than 53% of shareholders backed a nonbinding proposal at Timken (TKR) to have the $5.5 billion mechanical component-maker hire an investment bank to advise on a spinoff of its steel business into a separately traded public company. Other so-called "economic referendum proposals" seeking to have boards hire bankers to help them consider strategic alternatives have come up for a vote at a handful of companies in recent years. In 2013 there were five of these nonbinding proposals, up from four in 2012.

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