The United States Proxy Exchange, a non-profit organisation dedicated to facilitating retail shareholder rights in the US, has suspended its activities.
“On October 16, the USPX board of directors decided to temporarily suspend our operations,” says Executive Director Glyn Holton. “The suspension may last 18 months to two years. The immediate cause is my own time limitations.” Holton runs a separate financial risk consulting business.
It follows the closure of a similar initiative called Moxy Vote in July, which had sought to corral individual US mutual fund investors to vote their shares on contentious corporate issues.
USPX was launched in 2008 by Holton and another prominent shareholder activist, James McRitchie, although it traces its roots to a 2006 paper published by Holton in the Financial Analysts Journal. It was funded solely by membership dues.
“Since 2008, our membership has successfully engaged with corporations and advocated for reforms,” Holton said – addressing issues such as lockout annual
meetings, proxy plumbing and executive compensation.
“But we have failed at the bigger goal of growing a movement.”
There are just 35 members listed on the site. After the suspension, it’s hoped that a new plan for the movement will be developed.
One focus of USPX, was the creation of a model shareholder proposal for proxy access – to enable smallshareholders to have a say in nominating company directors.
The group, via fellow activist Kenneth Steiner, tabled a proxy access proposal at US tax services company H&R Block for the company’s annual meeting on September 13 this year.
The motion called for called for groups of 50 or more shareholders with at least a $2,000 stake in the company to be able to make nominations to the board.
The company, where incidentally Christianna Wood, chair of the International Corporate Governance Network (ICGN) is a director, advised voting against the measure. It said the eligibility standards were “inappropriately low” and that it would be impractical and expensive to implement. In the event the motion gained just 17,135,091 votes in favour with against 191m against.
But major investors such as the Florida State Board of Administration and the California State Teachers’ Retirement System (CalSTRS) voted in favour, according to records.
Even so, the idea has so far not gained endorsement from Institutional Shareholder Services (ISS), the dominant proxy-voting advisor. According to McRitchie, ISS said the proposals “could undermine the efforts of larger, long-term shareholders”.
Holton wrote in a posting: “ISS has become part of the problem in corporate governance and no longer part of the solution. Their aggressive opposition to version 2 of our proposal is regrettable.”