Investors will be able to vote on having greater say on the board at Walgreens, after a decision by the Securities and Exchange Commission paved the way for the motion to appear on the US drugstore chain’s annual meeting agenda.
The so-called “proxy access” proposal was filed by CtW Investment Group, the union-linked investment advisory group that has been in the news recently for its opposition to executive pay at software giant Oracle.
It specifies that the number of shareholder-nominated candidates shall not exceed 20% of the board and that nominating investors should have owned at least 3% of the company’s shares for at least three years.
Walgreens had opposed the resolution, arguing that it was open to “multiple interpretations” but CtW countered saying a similar proposal at Hewlett-Packard was not only supported by the board but “overwhelmingly adopted” by the tech firm’s shareholders at its AGM earlier this year.
Now the SEC has agreed with CtW, meaning that shareholders will be able to vote on the issue at Walgreen’s AGM early next year.
The SEC said in a ruling that it was “unable to conclude” that the CtW proposal was “inherently vague or indefinite”.
Walgreens argued that so few companies have adopted proxy access that it is “not a matter of general understanding or established practice”.Walgreens’ lawyer, Hogan Lovells’ Alan Dye, wrote: “Because the election of directors is at the heart of a company’s corporate governance, it is important that shareholders be provided with sufficient information when voting (and the board when considering implementation) to understand what implementation of the proposal would require and how implementation would affect the balance of power and privileges among all shareholders.”
But CtW’s counsel Cornish Hitchcock submitted that it was a “straight-forward” proposal, pointing to virtually identical proposals at Verizon, Chesapeake Energy and Nabors Corp among others.
Hitchcock wrote: “The proposal puts before shareholders a basic policy question: Should certain shareholders who hold a specified percentage of shares have the right to have their board candidates included in the… proxy materials?”
Proxy access is a focus of other investors such as Norges Bank Investment Management (NBIM), the arm of the Norwegian central bank which manages the Norwegian Government Pension Fund. It launched an effort last year to persuade several leading corporations to let shareholders have the right to nominate director candidates.
Change to Win already has consumer and corporate transparency campaigns against Walgreens.