Support from a range of leading institutional investors helped a ‘proxy access’ proposal from SRI investor John Harrington gain 53.5% support at agrochemical giant Monsanto’s annual meeting late last week.
Proxy access, shareholders’ right to nominate board director candidates, is a hot topic at the moment after a decision by the Securities and Exchange Commission to review the shareholder resolution process in the wake of a controversial proxy access proposal that was filed at retailer Whole Foods (RI coverage).
The Monsanto proposal
was submitted by Harrington, president of California-based Harrington Investments, and called for a change in the company’s bylaws to enable shareholder proxy access.
He proposed that the number of shareholder-nominated candidates “shall not exceed one-quarter of the number of directors” and that nominating investors have to hold 3% or more of Monsanto’s stock for three continuous years.
The board had recommended that shareholders oppose the motion, saying it was “unnecessary” and that it had already implemented a range of reforms, including annual director elections from 2016. Allowing shareholders to nominate candidates could “undermine” the existing nominating and corporate governance committees, it argued. It also said the 3% ownership/three-year criterion was “too low”.But a range of leading investors disagreed, according to voting tallies released after the AGM in St. Louis on January 30. They included Norges Bank Investment Management, PGGM, CalSTRS, the Ontario Teachers Pension Plan, CalPERS, the Florida State Board of Administration, to name a few. “The shareowners approved the shareowner proposal,” Monsanto said in an SEC filing, although the resolution is non-binding.
Harrington’s proposal was prompted by concerns about the board’s “insulation from important issues and lack of responsiveness and accountability” and the negative environmental and social impacts of its products and business practices.
PGGM said the resolution would “enhance shareholder rights while providing necessary safeguards to the nomination process” while CalPERS added it is a “firm supporter” of proxy access proposals at the 3%/three year mark.
The OTPP said it had “minimal concerns” with the 3% threshold, saying “it equates to a sufficiently high dollar amount of share ownership so as to not cause potential abuse of proxy access authority”.
Other shareholder resolutions on the ballot, on lobbying disclosure (filer: As You Sow) and independent chairman (private investors Grace Holden and Keith Schnip), had 24.44% and 19.25% support respectively.