The Securities and Exchange Commission says it won’t sanction US industrial group Deere & Co. for omitting a proposed shareholder resolution on political expenditure tabled by Walden Asset Management and the Tides Foundation.
It rests on the seemingly trivial matter of a gap between the date on a letter and a mailing date.
The SEC has written to the Illinois-based farm machinery maker saying it will take no action if the company omits the proposal from the ballot for its next shareholder meeting early next year.
The regulator has accepted Deere’s arguments that there was a three-day gap between the dates on Walden’s filing and proof of ownership letters and a mailing stamp.
“There appears to be some basis for your view that Deere may exclude the proposal,” the SEC said to Deere in a letter earlier this month. It said it appeared that the proponents had failed to correctly supply documentary evidence that they met the minimum one-year ownership requirement.
Walden’s Senior Vice President and Director of ESG Shareholder Engagements Timothy Smith wrote on November 8: “We suggest that Deere is attempting tocreate new ground for omission of resolutions in this argument, one that will be impossible for the Securities and Exchange Commission, proponents or issuers to implement”.
“The date of submission is the date on the letters,” he argued. “If the letter were placed in a post box of the US Postal Service on a Saturday and was not picked up and postmarked until Monday, Deere would argue that there was a gap in proof of ownership.”
He warned of an “administrative nightmare”. “Investors who filed in good faith would be at the mercy of the postal system,” he said.
The planned resolution would have called on Deere to prepare a report on the company’s direct and indirect political expenditures and board oversight of such spending.
Smith argued in an October 28 letter to the SEC that similar proposals have been presented to “scores of companies” over the past give years. He pointed out that investor votes in favour have averaged 33% – with eight companies receiving votes of more than 40%.
The Deere annual general meeting takes place on February 29.