SIDLEY CORPORATE GOVERNANCE REPORT
Overview .......................................... 1
The SEC’s 2010 Proxy
Access Rule .................................... 3
Recent Uptick in Shareholder Proxy
Access Proposals ........................... 3
Companies Targeted for 2016 .............. 4
Institutional Investor Support for
Proxy Access .................................. 4
Proxy Advisory Firm Policies on
Proxy Access .................................. 7
ISS Negative Vote Recommendations
Against Directors – Focus on Secondary
Provisions............................................. 8
Grounds for Exclusion of
Shareholder Proxy Access
Proposals ...................................... 11
SEC Staff Guidance on Excludability of
Directly Conflicting Shareholder
Proposals ........................................... 12
SEC Staff Grants No-Action Relief for
Substantially Implemented Proxy Access
Proposals – With Some Exceptions .... 13
Voting Results on Proxy Access
Proposals ...................................... 14
Adoption of Proxy Access Provisions
And Typical Parameters ............... 16
A Moving Target – Amendments to
Previously Adopted Provisions ........... 17
Potential Impact of Proxy Access on
Corporate Governance ................. 22
International Perspectives on Proxy
Access................................................ 22
Practical Considerations ............... 23
Appendix – Select Terms of Proxy
Access Provisions Adopted Since
January 1, 2015
Proxy Access Update – Momentum
Continues to Build in 2016
Proxy Access Will Likely Become a Majority Practice Among Large
Public Companies Within the Next Six Months
September 22, 2016
Through the collective efforts of large institutional investors, including
public and private pension funds, and other shareholder proponents,
shareholders are increasingly gaining the power to nominate a
portion of the board without undertaking the expense of a proxy
solicitation. By obtaining proxy access (the ability to include
shareholder nominees in the company’s own proxy materials),
shareholders will have yet another tool to influence board decisions.
More than 41% of companies in the S&P 500 have now adopted
proxy access. We expect that proxy access will become a majority
practice among S&P 500 companies within the next six months.
As a follow-up to our previous reports on proxy access, this update
reflects recent developments on the topic, including:
• details about ISS negative vote recommendations against certain
directors at three companies for failure to adequately respond to
majority-supported shareholder proxy access proposals,
• the refusal of the SEC’s Division of Corporation Finance (SEC
Staff) to grant no-action relief on the basis of “substantial
implementation” to a company seeking to exclude a shareholder
proposal that requested that the board adopt specified revisions to
the company’s existing proxy access bylaw,
• updated voting results on proxy access proposals so far in 2016,
• the continuing steady pace of proxy access bylaw adoptions and
the convergence toward standard key parameters (most
commonly 3% for 3 years for up to 20% of the board (at least 2
directors) with a nominating group size limit of 20), and
• amendments being made to proxy access bylaws resulting from
shareholder outreach and evolving market practices.
We have also updated the Appendix which highlights, on a companyby-company basis, various terms of proxy access provisions adopted
by 263 companies in 2015 and so far in 2016, including the terms
adopted by 22 companies since we published our last Sidley
Corporate Governance Report on proxy access on June 27, 2016.
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Snapshot of Proxy Access Provisions Adopted Since January 1, 2015
(See the Appendix for these and additional provisions, presented on a company-by-company basis)
Prevalence of
Selected Alternatives
Ownership
Threshold and
Duration
• 3% / 3 years – 259/263
(98%); included in SEC
vacated rule
• 5% / 3 years – 4/263 (2%)
• Nearly all favor 3%
• Shareholder proposals
more likely if company
adopts at 5%
• 20% cap – 59/263 (22%)
• Greater of 2 or 25% –
12/263 (5%)
• ISS and Glass Lewis
support 3%
• CII supports 3% and views 5% as
“troublesome”
• ISS and Glass Lewis
support 25%
• Greater of 2 or 20% –
170/263 (65%)
Proxy Access
Nominee Limit
(Max. % of
Board)
Proxy Advisory Firm Policies
and Council of Institutional
Investors (CII) Position
Shareholder
Viewpoints*
• Most favor 20-25%
• 25% cap – 22/263 (8%);
included in SEC vacated rule
• If adopted after majority-supported
shareholder proposal, ISS may issue
negative vote recommendations
against directors if less than 20%
• CII favors ability to nominate at least
2 candidates
• No limit – 6/263 (2%);
included in SEC vacated rule
• 50 – 1/263 (0%)
• 30 – 2/263 (1%)
Nominating
Group Size Limit
• 25 – 10/263 (4%)
• 20 – 237/263 (90%)
• 15 – 3/263 (1%)
• General consensus that
limit of 20 is reasonable
• Possibility of shareholder
proposals seeking
removal of limits
• 10 – 3/263 (1%)
• ISS favors minimal or no limits
• If adopted after majority-supported
shareholder proposal, ISS may issue
negative vote recommendations
against directors if less than 20
• CII views any limit as “troublesome”
• 5 – 1/263 (0%)
* Derived from publicly available voting policies as well as preferences expressed through engagement and voting results.
While proxy access has been the subject of shareholder proposals for several years, 2015 was a tipping point,
following the private ordering pattern of majority voting in uncontested director elections. The proposals request
that the board amend the bylaws to allow large, long-standing shareholders (or groups of shareholders) to
nominate directors and include those nominees in the company’s own proxy statement and related materials. The
2015 proxy season saw a significant increase in the number of shareholder proxy access proposals and
shareholder support for such proposals (see box below), as well as an increased frequency of negotiation and
adoption of proxy access via board action—including an accelerating trend towards board adoption without
receipt of a shareholder proposal. This trend has continued in 2016.
Proxy access initiatives had limited levels of success prior to 2015. However, shareholder support started to
increase in 2014 as proponents began to focus on the 3% for 3 years ownership requirement adopted by the SEC
in its 2010 rulemaking efforts (as described below).
Key Highlights of Shareholder Proxy Access Proposal Voting Results*
Shareholder Proxy Access Proposals
2014
2015
• Voted On
18
91
81
• Passed
5
55
42
34%
55%
51%
• Average Support
2016 (through 9/20/16)
* Data points in this report with respect to proxy access proposals are derived from SharkRepellent.net, last accessed on September 20,
2016. All voting results in this report are calculated on the basis of votes cast “for” the proposal divided by the sum of votes cast “for” and
“against” that proposal (not taking into account abstentions). For purposes of this report, references to “shareholder proxy access
proposals” mean proposals seeking a proxy access right rather than proposals seeking amendments to an existing proxy access bylaw.
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In 2015, with a major initiative from public pension funds led by New York City Comptroller Scott M. Stringer and
with encouragement from major investors, such as TIAA, and the large institutional investor industry group, the
Council of Institutional Investors (CII), proxy access took hold. Adding to the momentum was the SEC Staff’s
refusal to grant no-action relief in situations where a company intends to put forward its own competing proposal.
Proxy advisory firm policies supporting proxy access added to the momentum. Moreover, in August 2014, the
CFA Institute published a report discussing the potential economic benefits of proxy access; this report has been
1
cited by Comptroller Stringer, CalPERS and other proponents in their proposals. In early 2016, a business law
professor published a policy brief criticizing the CFA Institute report as being “deeply flawed” and urging that it not
2
be used as support for mandatory proxy access.
The broad-based shareholder campaign for proxy access on a company-by-company basis, and the momentum
that continues to accelerate among targeted companies and other leading companies to respond by taking action
to adopt proxy access (with or without first receiving a shareholder proposal), is reminiscent of the campaign
several years ago for companies to replace plurality voting with majority voting in the uncontested election of
directors. Both issues relate to the ability of shareholders to influence the composition of the board, and both
campaigns show the power of concerted efforts at private ordering.
THE SEC’S 2010 PROXY ACCESS RULE
The SEC has unsuccessfully sought to adopt a market-wide proxy access rule for decades. Most recently, in
2010, the SEC adopted a proxy access rule (Exchange Act Rule 14a-11) that would have given shareholders the
ability to nominate candidates through the company’s proxy materials if a shareholder (or a group of shareholders
without any limit on the size of the nominating group) held 3% of the company’s shares for at least three years.
Under the rule, a nominating shareholder (or group of shareholders, with no limit on the size of the group) could
nominate one proxy access director, or 25% of the board, whichever is greater. Rule 14a-11 was adopted shortly
after Section 971 of the Dodd-Frank Act confirmed the SEC’s authority to promulgate a proxy access rule. The
SEC issued final rules mandating proxy access in August 2010, which were scheduled to become effective in
November 2010. In addition, the SEC also amended Exchange Act Rule 14a-8(i)(8) to allow shareholder
3
proposals relating to proxy access and certain other director election mechanisms.
In September 2010, Business Roundtable and the U.S. Chamber of Commerce challenged the validity of Rule
14a-11. In 2011, the U.S. Court of Appeals for the District of Columbia Circuit vacated Rule 14a-11 on the
grounds that the SEC had acted “arbitrarily and capriciously” in promulgating the rule and failing to adequately
4
assess its economic impact. The SEC did not appeal the court’s decision and has not re-proposed any proxy
access rule since that decision; however, the amendment to Rule 14a-8 described above became effective in
5
September 2011, thereby opening the door to shareholder proposals seeking proxy access.
RECENT UPTICK IN SHAREHOLDER PROXY ACCESS PROPOSALS
In public comments on the SEC’s proposed Rule 14a-11, several commenters expressed the view that the matter
should be left to shareholders and companies to decide on a company-by-company basis through private
6
ordering. Private ordering may take place, for example, pursuant to Section 112 of the Delaware General
7
Corporation Law.
Fifteen companies adopted proxy access prior to 2015, including a few large companies, such as HewlettPackard Company (now known as HP Inc.), The Western Union Company and Verizon Communications Inc.,
which each adopted proxy access after receiving a shareholder proposal on the topic, as well as some companies
that have since gone private. In addition, proxy access with a 5% for 2 years ownership threshold has been
mandatory for companies incorporated in North Dakota since 2008; and we are aware of one public company that
reincorporated to North Dakota from Delaware several years ago with the stated purpose of taking advantage of
8
this and other “shareholder-friendly” provisions. To date, no shareholder has included a director nominee in the
9
proxy materials of a U.S. company pursuant to a proxy access right.
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The private ordering effort is now in full swing. Shareholder proposals seeking proxy access have been the
defining feature of the 2015 and 2016 proxy seasons. 115 shareholder proxy access proposals were submitted for
the 2015 proxy season, which was more than four times the number submitted for the 2014 proxy season. Based
on the success of private ordering efforts in 2015, more than 200 shareholder proxy access proposals were filed
for the 2016 proxy season, well surpassing prior-year levels.
The New York City Pension Funds, with approximately $160 billion under management, accounted for the
majority of the proxy access proposals submitted for the 2015 proxy season. In November 2014, Comptroller
Stringer announced the “Boardroom Accountability Project,” targeting 75 companies with non-binding shareholder
10
proxy access proposals. The proposals request that the board adopt a bylaw to give shareholders who meet a
threshold of owning 3% of the company’s stock for three or more years the right to include their director
candidates, representing up to 25% of the board, in the company’s proxy materials, with no limit on the number of
shareholders that could comprise a nominating group. According to Comptroller Stringer, the targeted companies
were selected due to concerns about the following three priority issues:
•
Climate change (i.e., carbon-intensive coal, oil and gas and utility companies).
•
Board diversity (i.e., companies with little or no gender, racial or ethnic diversity on the board).
•
Excessive executive compensation (i.e., companies that received significant opposition to their 2014 sayon-pay votes).
COMPANIES TARGETED FOR 2016
On January 11, 2016, Comptroller Stringer announced that the New York City Pension Funds expanded the
“Boardroom Accountability Project” by submitting proxy access proposals at 72 companies for the 2016 proxy
11
season. 36 companies that had received proxy access proposals from Comptroller Stringer’s office in 2015 were
targeted again for 2016 because they had not yet adopted proxy access at a 3% ownership threshold (two
companies that had adopted a 5% proxy access bylaw received a binding proposal for 2016, each of which has
12
since amended its proxy access bylaw to reduce the required ownership threshold from 5% to 3% ). Another 36
companies were newly targeted for 2016, with a focus on the New York City Pension Fund’s largest portfolio
companies, coal-intensive utilities and companies selected due to concerns about board diversity and excessive
CEO pay. The form of proxy access proposal submitted by Comptroller Stringer for the 2016 proxy season did not
differ substantively from the template submitted for the 2015 proxy season except that it no longer specifically
sought shareholder approval of proxy access bylaws. As of September 20, 2016, 55 of the 72 companies targeted
13
for 2016 have adopted proxy access. Companies that were targeted by the New York City Pension Funds for
+
2016 are identified by an in the Appendix.
INSTITUTIONAL INVESTOR SUPPORT FOR PROXY ACCESS
Proxy access is supported by many institutional investors, including the following:
•
BlackRock – will review proxy access proposals on a case-by-case basis and generally support them
provided that their parameters are not “overly restrictive or onerous” and “provide assurances that the
mechanism will not be subject to abuse by short-term investors, investors without a substantial
investment in the company, or investors seeking to take control of the board.”
•
14
California Public Employees’ Retirement System (CalPERS) – indicated that proxy access was one of its
strategic priorities for the 2015 proxy season and supported proxy access proposals at
100 companies in 2015.
15
In February 2016, CalPERS announced that proxy access will continue to be a
strategic priority in 2016 and that it will continue to support shareholder proposals at the 3% for 3 years
threshold and will issue adverse votes against director nominees at companies where proxy access
proposals passed in 2015 and that implemented provisions that restrict or limit the use of proxy access.
16
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Finally, CalPERS updated its Global Governance Guidelines in March 2016 to recommend that
companies adopt proxy access at the 3% for 3 years threshold to nominate up to 25% of the board.
•
California State Teachers’ Retirement System (CalSTRS) – supports proxy access at the 3% for 3 years
threshold, capped at a minority of board seats.
•
17
18
State Street Global Advisors – will review proxy access proposals on a case-by-case basis evaluating the
company’s specific circumstances and the proposal’s potential effect on shareholder value, taking into
account “the ownership thresholds and holding duration proposed in the resolution, the binding nature of
the proposal, the number of directors that shareholders may be able to nominate each year, company
governance structure, shareholder rights and board performance.”
•
19
TIAA (formerly TIAA-CREF) – wrote to the 100 largest companies in which it invests in February 2015,
encouraging them to adopt proxy access at the 3% for 3 years threshold.
20
In addition, TIAA submitted
proxy access proposals at some companies for the 2016 proxy season.
•
T. Rowe Price – supports proxy access proposals at the 3% for 3 years threshold and opposes
“significant impediments” to a proponent’s ability to aggregate holdings with other shareholders to qualify
for proxy access. For the 2016 proxy season, T. Rowe Price added to its Proxy Voting Policies that it will
generally recommend votes against shareholder proposals to amend existing proxy access bylaws if the
company’s bylaw meets the 3% for 3 years threshold and does not impede aggregation.
•
21
United Brotherhood of Carpenters – sent letters to 50 companies in late 2015 seeking a proxy access
right in the event that the board refuses to accept the resignation of an incumbent director who fails to
receive majority support.
22
The letters were sent to companies with a majority voting standard and a
director resignation policy and that had shareholder proxy access proposals on the ballots for their 2015
annual meetings, whether or not those proposals received majority support.
•
Vanguard – announced in February 2016 that it amended its proxy voting guidelines to decrease the
ownership threshold for likely support from 5% to 3%. Vanguard stated that the policy change was
informed by engagement over the past year and “the critical mass of access adoption at the 3 percent
ownership level by an increasingly wide range of companies.” Vanguard will continue to evaluate proxy
access proposals on a case-by-case basis but will now generally support proposals at the 3% for 3 years
threshold, capped at 20% of board seats.
23
Fidelity generally votes against management and shareholder proposals to adopt proxy access.
24
Several institutional investors have recently adopted proxy access, shedding light on the terms they presumably
25
find acceptable. The table below shows the key parameters of the proxy access provisions adopted by major
institutional investors since late 2015. All were adopted by the board by unilateral bylaw amendment, except
where otherwise indicated.
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Ownership Threshold
and Duration
Nominee Limit
(Max % of Board)
Nominating Group
Size Limit
The Bank of New York Mellon Corp.
(adopted on 10/13/15)
3% for 3 years
20%
(at least 2 directors)
20
BlackRock, Inc. (approved by
shareholders and adopted on 5/25/16;
amended on 7/20/16)
3% for 3 years
25%
20
The Goldman Sachs Group, Inc.
(adopted on 10/23/15)
3% for 3 years
20%
(at least 2 directors)
15
JPMorgan Chase & Co.
(adopted on 1/19/16)
3% for 3 years
20%
(at least 2 directors)
20
Morgan Stanley
(adopted on 10/29/15)
3% for 3 years
20%
(at least 2 directors)
20
State Street Corporation
(adopted on 10/15/15)
3% for 3 years
20%
20
T. Rowe Price Group, Inc.
(adopted on 12/10/15)
3% for 3 years
20%
(at least 2 directors)
20
Institution
CII has long supported proxy access, favoring a broad-based SEC rule imposing proxy access. Absent such a
rule, Section 3.2 of CII’s Corporate Governance Policies states that a company should provide access to
management proxy materials for an investor or a group of investors that have held in the aggregate at least 3% of
26
the company’s voting stock for at least 2 years, to nominate less than a majority of the directors.
In August 2015, CII issued guidelines setting forth what it considers best practices for companies adopting proxy
access provisions. The guidelines highlight seven provisions that CII finds “troublesome” in that they could
27
“significantly impair shareowners’ ability to use proxy access, or even render access unworkable.” The
provisions that are of most concern to CII are:
•
An ownership threshold of 5%.
•
The percent or number of board members that may be elected could result in fewer than 2 proxy access
nominees.
•
Aggregation of shareholders to form a nominating group is limited to a specified number.
•
Not counting loaned shares (that meet certain conditions with respect to recall and voting) toward the
ownership threshold during the holding period.
•
A requirement for a nominating shareholder to continue to hold the requisite percentage of shares after
the annual meeting.
•
Re-nomination restrictions in the event a proxy access nominee fails to receive a specified minimum
percentage of votes.
•
Prohibitions on third-party compensation arrangements with proxy access nominees (although CII
supports disclosure of such arrangements).
When the guidelines were issued, the interim executive director of CII stated that every proxy access provision in
28
effect at the time included at least one of these “troublesome” provisions.
Some institutional investors that favor proxy access coordinated their efforts during the 2015 proxy season in an
attempt to increase investor support for the proxy access proposals they sponsored. Specifically, the New York
City Pension Funds, CalPERS and other large labor-affiliated pension funds each filed Form PX14A6Gs with the
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SEC enabling them to communicate in support of their proxy access proposals (but not collect actual proxies)
without such communications being subject to the proxy solicitation rules. The New York City Pension Funds
partnered with CalPERS again in 2016 to conduct exempt solicitations in support of proxy access proposals.
According to a report on the 2016 proxy season by Broadridge and PricewaterhouseCoopers, institutional
investors are four times more likely to support proxy access than are individual investors: 60% of votes cast by
institutional investors were in favor of proxy access in the first half of 2016, compared with only 15% of those cast
29
by individual retail investors. The report also indicated that retail investors voted only 28% of the shares they
own (compared with 91% of institutional investors). These findings suggest that companies facing a proxy access
vote should seek out opportunities to engage with retail investors and encourage them to vote.
PROXY ADVISORY FIRM POLICIES ON PROXY ACCESS
Both Institutional Shareholder Services (ISS) and Glass, Lewis & Co. generally favor proxy access for significant,
long-term shareholders.
ISS
Shareholder and Management Proxy Access Proposals
ISS generally recommends in favor of shareholder and management proxy access proposals with all of the
following features:
•
An ownership threshold of not more than 3% of the voting power.
•
A holding period of no longer than 3 years of continuous ownership for each member of the nominating
group.
•
Minimal or no limits on the number of shareholders that may form a nominating group.
•
A cap on the number of available proxy access seats of generally 25% of the board.
30
ISS will review any additional restrictions for reasonableness. ISS will generally recommend a vote against
proposals that are more restrictive than the ISS guidelines. ISS policy does not specifically address how it
evaluates competing shareholder and management proposals. In 2016, ISS recommended votes in favor of the
shareholder proposals and for the management proposals with 3% ownership thresholds but against the
management proposals with 5% ownership thresholds. In 2015, ISS recommended in favor of the shareholder
proposals and against the management proposals, as described below.
Board Responsiveness to a Majority-Supported Shareholder Proposal
31
ISS issued FAQs in December 2015 clarifying when it may issue negative vote recommendations against
directors of companies that do not implement a majority-supported shareholder proxy access proposal
substantially in accordance with its terms.
32
In evaluating a board’s response to a majority-supported proposal,
ISS will examine:
•
Whether the major points of the shareholder proposal were implemented.
•
Additional provisions that were not included in the shareholder proposal in order to assess whether such
provisions unnecessarily restrict the use of a proxy access right.
ISS may recommend votes against individual directors, nominating/governance committee members or the entire
board if the proxy access provision implemented or proposed by management contains material restrictions more
stringent than those included in the shareholder proposal with respect to the following:
•
Ownership thresholds above 3%.
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•
Ownership duration longer than 3 years.
•
Aggregation limits below 20 shareholders.
•
Cap on proxy access nominees set at less than 20% of the board.
ISS may issue negative vote recommendations against directors if the aggregation limit or cap on proxy access
nominees differs from the terms of the shareholder proposal and the company has not disclosed its shareholder
outreach efforts and engagement.
If the proxy access provision contains restrictions or conditions on proxy access nominees, ISS will review it on a
case-by-case basis and consider the following restrictions as “potentially problematic,” particularly when used in
combination:
•
Prohibitions on resubmission of failed nominees in subsequent years.
•
Restrictions on third-party compensation of proxy access nominees.
•
Restrictions on the use of proxy access and proxy contest procedures for the same meeting.
•
How long and under what terms an elected shareholder nominee will count towards the maximum
number of proxy access nominees.
•
When the right will be fully implemented and accessible to qualifying shareholders.
ISS views the following restrictions as “especially problematic” in that they “effectively nullify the proxy access
right”:
•
Counting individual funds within a mutual fund family as separate shareholders for purposes of an
aggregation limit.
•
The imposition of post-meeting shareholding requirements for nominating shareholders.
ISS policy does not address the unilateral adoption or amendment of proxy access bylaws.
ISS NEGATIVE VOTE RECOMMENDATIONS AGAINST DIRECTORS
– FOCUS ON SECONDARY PROVISIONS
33
As discussed in a report on proxy access bylaws issued by ISS in August 2016, ISS initially issued negative
vote recommendations against certain directors at three companies in 2016 for failure to adequately respond to
majority-supported 2015 shareholder proxy access proposals by adopting proxy access bylaws that ISS deemed
to be “significantly more restrictive than the shareholder proposal.”
Company
Affected Directors
CBL & Associates Properties, Inc.
(ISS Report dated 4/13/16)
Lead independent director and Governance
Committee chair
Cheniere Energy, Inc.
(ISS Report dated 5/20/16)
Governance & Nominating Committee members
Cloud Peak Energy Inc.
(ISS Report dated 4/28/16 and Proxy Alert dated 5/2/16)
Governance Committee members
In each case, the company originally adopted a proxy access bylaw with standard key parameters—3% for 3
years for up to 20% of the board with a group size limit of 20. However, ISS took issue with restrictive secondary
provisions in the proxy access bylaws when combined with (i) inadequate disclosure regarding the rationale for
some of the additional restrictions or shareholder engagement efforts when developing the proxy access bylaw
and (ii) the companies’ two-thirds vote requirements for shareholder-approved bylaw amendments.
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Restrictive Provisions Noted by ISS
Companies
• Group size limit of 20 shareholders (versus no limit in the shareholder proposal) without
disclosure of shareholder outreach indicating a preference for such limit
CBL, Cloud Peak
Energy
• Cap on proxy access nominees of 20% of the board (versus 25% in the shareholder
proposal) without disclosure of shareholder outreach indicating a preference for the 20% cap
Cloud Peak Energy
• The number of proxy access nominees will be reduced by the number of nominees who were
proxy access nominees at either of the preceding 2 annual meetings and whose nomination
has been submitted by the board
CBL, Cheniere
Energy
• The maximum number of proxy access nominees will be reduced by (i) the number of
director candidates nominated other than those nominated as proxy access nominees; and
(ii) any proxy access nominee whom the board decides to nominate as a board nominee
Cloud Peak Energy
• The board may omit proxy access nominees if it receives notice that any shareholder intends
to nominate a director pursuant to the advance notice procedures or if the nominator intends
to participate in a proxy contest at the same meeting
CBL, Cheniere
Energy
• If the company receives notice that a shareholder intends to nominate (other than via proxy
access) 50% or more of the directors to be elected at a meeting, no proxy access nominees
will be included in the company's proxy materials
Cloud Peak Energy
Inc.
• A nominator must agree not to engage in a solicitation and may not participate in another
party's solicitation
Cloud Peak Energy
• A proxy access nomination deadline of 150-120 days prior to the last annual meeting’s proxy
issuance anniversary (versus 120-90 days for other matters)
Cheniere Energy
• The nominator must certify its intention to hold the required shares for one year following the
annual meeting
CBL
• The company may omit a proxy access nominee who is or has been an officer or director of a
competitor in the past 3 years
CBL, Cheniere
Energy, Cloud Peak
Energy
• The board may omit a proxy access nominee who was nominated at either of the last 2
meetings and received a vote of less than 25% of the shares of common stock entitled to
vote for such nominee
Cheniere Energy
• The board will have broad and binding authority to interpret the proxy access provision and
make necessary determinations
CBL, Cheniere
Energy, Cloud Peak
Energy
ISS reversed the negative vote recommendations against directors at Cloud Peak Energy Inc. after the company
amended its proxy access bylaw to (i) eliminate the aggregation limit of 20 shareholders, (ii) increase the cap on
proxy access nominees from 20% to 25% of the board and (iii) remove all of the secondary provisions that ISS
deemed overly restrictive. At the other two companies, the affected directors were elected by the shareholders,
albeit with a relatively lower percentage of support (i.e., approximately 75% support at CBL & Associates
Properties, Inc. and between 88-91% support at Cheniere Energy, Inc.). Cheniere Energy, Inc. subsequently
amended its proxy access bylaw to, among other things, remove the provision permitting the company to exclude
a proxy access nominee who received less than 25% support at one of the two preceding annual meetings.
Proxy Access Nominees
The FAQs ISS issued in December 2015 also clarify that when evaluating proxy access nominees, it will take into
account any relevant factors, including:
•
•
Nominee/nominator specific factors:
-
Nominators’ rationale.
-
Nominators’ critique of management/incumbent directors.
-
Nominee’s qualifications, independence and overall fitness for directorship.
Company specific factors:
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•
-
Company performance relative to its peers.
-
Background to the contested situation (if applicable).
-
Board’s track record and responsiveness.
-
Independence of directors/nominees.
-
Governance profile of the company.
-
Evidence of board entrenchment.
-
Current board composition (skill sets, tenure, diversity, etc.).
-
Ongoing controversies, if any.
Election specific factors:
-
Whether the number of nominees exceeds the number of board seats.
-
Vote standard for the election of directors.
Beginning in November 2015, ISS’ QuickScore governance ratings product has tracked, on a “zero-weight” basis,
whether a company has adopted proxy access. In particular, ISS tracks the minimum ownership threshold and
holding period, the maximum number of shareholders that can comprise a nominating group and the maximum
percentage or number of board seats open to proxy access nominees.
34
In August 2016, ISS launched its annual global benchmark policy survey for 2017 which did not include any
questions relating to proxy access. This does not necessarily mean that no changes will be made to ISS proxy
voting policy regarding proxy access for the 2017 proxy season.
35
Glass Lewis
Glass Lewis’ proxy voting policies for 2016 provide that it will review on a case-by-case basis shareholder proxy
access proposals and the company’s response, including whether the company offers its own proposal in place
of, or in addition to, the shareholder proposal. Glass Lewis will consider:
•
Company size.
•
Board independence and diversity of skills, experience, background and tenure.
•
The shareholder proponent and the rationale for the proposal.
•
The percentage of ownership requested and the holding period requirement (although note that Glass
Lewis policy does not specify a preferred percentage).
•
The shareholder base in both percentage of ownership and type of shareholder (such as a hedge fund,
activist investor, mutual fund or pension fund).
•
Board and management responsiveness to shareholders, as evidenced by progressive shareholder rights
policies (such as majority voting or board declassification) and reaction to shareholder proposals.
•
Company performance and steps taken to improve poor performance (such as appointing new executives
or directors or engaging in a spin-off).
•
Existence of anti-takeover protections or other entrenchment devices.
•
Opportunities for shareholder action (such as the ability to act by written consent or the right to call a
special meeting).
Beginning with the 2016 proxy season, Glass Lewis considers the following factors when making vote
recommendations with respect to conflicting management and shareholder proposals:
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•
The nature of the underlying issue.
•
The benefit to shareholders from implementation of the proposal.
•
The materiality of the differences between the terms of the conflicting proposals.
•
The appropriateness of the provisions in the context of a company’s shareholder base, corporate
structure and other relevant circumstances.
•
A company’s overall governance profile and, specifically, its responsiveness to shareholders as
evidenced by its response to previous shareholder proposals and its adoption of “progressive shareholder
rights provisions” (which Glass Lewis has not defined).
36
GROUNDS FOR EXCLUSION OF SHAREHOLDER PROXY ACCESS PROPOSALS
Under the SEC’s proxy rules, a company may exclude a shareholder proxy access proposal from its proxy
materials if the proposal fails to meet any of the procedural and substantive requirements of Exchange Act
Rule 14a-8. A company may seek no-action relief from the SEC Staff pursuant to which the company can exclude
the proposal from its proxy materials. Two substantive grounds that have been relied on by companies seeking to
exclude a shareholder proxy access proposal are that the proposal directly conflicts with a management proposal
(Rule 14a-8(i)(9)) or has already been substantially implemented by the company (Rule 14a-8(i)(10)). However,
as discussed below, the SEC Staff issued guidance in the fall of 2015 that has made it more difficult for a
company to obtain no-action relief under Rule 14a-8(i)(9) on the grounds that a shareholder proxy access
proposal directly conflicts with a management proxy access proposal. Therefore, companies that have adopted
proxy access have argued “substantial implementation” when seeking to exclude proxy access proposals from
their 2016 proxy statements and have generally been successful as discussed below. However, as discussed
below, a recent no-action letter illustrates that the SEC Staff will distinguish between proposals seeking to adopt
proxy access with specified parameters versus proposals requesting that specific revisions be made to an existing
proxy access bylaw.
Directly Conflicting Proposals
In December 2014, the SEC Staff granted no-action relief to Whole Foods Market, Inc. on the basis that a 3% for
37
3 years shareholder proxy access proposal directly conflicted with a 9% for 5 years management proposal.
When Whole Foods filed its preliminary proxy statement with the SEC after this relief was granted, the ownership
threshold in the management proposal was reduced from 9% to 5%.
In the wake of the no-action relief granted to Whole Foods, it was broadly expected that companies would counter
shareholder proxy access proposals by putting forward management proxy access proposals with higher
minimum ownership thresholds, and obtain no-action relief on the basis that the proposals were conflicting and
therefore excludable. However, following the grant of no-action relief to Whole Foods, James McRitchie, the
proponent of the Whole Foods proposal, appealed the grant to the SEC and a letter-writing campaign by incensed
institutional investors followed.
In January 2015, SEC Chair Mary Jo White reversed course. In an unusual development, Chair White directed
38
the SEC Staff to review Rule 14a-8(i)(9) as a basis for exclusion. As discussed in a previous Sidley Update,
following Chair White’s direction, the Division of Corporation Finance announced that it would not express a view
on the application of Rule 14a-8(i)(9) for the remainder of the 2015 proxy season with respect to all shareholder
39
proposals—not just those seeking proxy access—and withdrew the no-action relief granted to Whole Foods.
Business Roundtable and other commentators expressed concern that the SEC Staff’s approach forced
companies faced with a shareholder proxy access proposal that are considering a management proposal to either
include the shareholder proposal in the proxy materials, even though it will compete with the similar management
proposal and possibly lead to confusion, or omit the shareholder proposal, creating a heightened risk of litigation
and negative targeting by certain pension funds and proxy advisory firms. As described below, seven companies
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included competing shareholder and management proxy access proposals on the ballot in 2015 and five
companies have done so in 2016. In a speech in June 2015, SEC Chair White noted that, notwithstanding
concerns that shareholders would be confused by two competing proposals, “shareholders were able to sort it all
40
out and express their views.”
SEC STAFF GUIDANCE ON EXCLUDABILITY OF
DIRECTLY CONFLICTING SHAREHOLDER PROPOSALS
41
In October 2015, the SEC Staff issued Staff Legal Bulletin No. 14H (CF) (SLB No. 14H) which provided new
guidance on the excludability of shareholder proposals that “directly conflict” with management proposals under
42
Rule 14a-8(i)(9). As discussed in a previous Sidley Update, after reviewing the history and intended purpose of
Rule 14a-8(i)(9) per SEC Chair White’s request, the SEC Staff announced in SLB No. 14H that it will interpret the
rule more narrowly than it has in the past. The SEC Staff will permit a company to exclude a shareholder proposal
as directly conflicting with a management proposal only “if a reasonable shareholder could not logically vote in
favor of both proposals, i.e., a vote for one proposal is tantamount to a vote against the other proposal.”
A non-binding shareholder proposal seeking proxy access on terms different from management’s proxy access
proposal will generally not be excludable under Rule 14a-8(i)(9). Proposals seeking a similar objective (e.g., proxy
access) but on different terms (i.e., a different means of accomplishing the same objective) would not “directly
conflict,” as a reasonable shareholder could logically vote in favor of both proposals.
SEC Staff Example of Proxy Access Proposals That Do Not Directly Conflict
Management proposal with a 5% for 3 years ownership
threshold and limit on nominees of 10% of the board
Shareholder proposal with a 3% for 3 years ownership
threshold and limit on nominees of 20% of the board
The SEC Staff does not believe that a reasonable shareholder would logically vote for two binding shareholder
and management proposals that contain two mutually exclusive mandates. In the case of such a “direct conflict,”
the SEC Staff could, in its no-action response, allow a shareholder proponent to revise its proposal to make it
non-binding rather than binding, and therefore potentially not excludable under Rule 14a-8(i)(9).
In light of the new guidance, competing proxy access proposals continued to appear on ballots during the 2016
proxy season. In a situation where both the management and shareholder proposals are approved by
shareholders, the board may have to consider the effects of both proposals; the SEC Staff does not consider such
a decision to represent the kind of “direct conflict” the rule was designed to address. In SLB No. 14H, the SEC
Staff noted that, to minimize concerns about shareholder confusion, any company that includes shareholder and
management proposals on the same topic on its ballot can include proxy statement disclosure explaining the
differences between the two proposals and how the company would expect to consider the voting results.
Substantially Implemented Proposals
Companies that adopt proxy access can seek to omit a shareholder proxy access proposal on the grounds that it
has been “substantially implemented” by the company. In March 2015, the SEC granted General Electric
Company no-action relief allowing it to exclude a shareholder proxy access proposal on these grounds. The
shareholder proposal had sought an ownership threshold of 3% for 3 years, for up to 20% of the board’s seats but
was silent on the number of shareholders that could comprise a nominating group. General Electric adopted a
provision with the same 3% for 3 years threshold for up to 20% of board seats, but limited to 20 the number of
43
shareholders that could compromise a nominating group.
Substantial implementation under Rule 14a-8(i)(10) has been the primary basis of exclusion being asserted by
companies when seeking no-action relief to exclude shareholder proxy access proposals received for their 2016
annual meetings. A number of companies that adopted proxy access on relatively standard terms sought to
exclude proposals filed by John Chevedden arguing that their proxy access bylaws implement the “essential
objectives” of his proposal even though his proposal contains (i) a higher percentage of board seats available to
proxy access nominees (25%), (ii) no limit on the size of the nominating group and (iii) no restrictions on proxy
access nominees that are not also applicable to other director candidates.
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SEC STAFF GRANTS NO-ACTION RELIEF FOR SUBSTANTIALLY IMPLEMENTED
PROXY ACCESS PROPOSALS – WITH SOME EXCEPTIONS
So far in 2016, the SEC Staff has granted no-action relief to 37 companies that sought to exclude shareholder
proxy access proposals from their 2016 proxy statements on the grounds that they had been substantially
implemented by the company. Each of the companies adopted a proxy access bylaw with a 3% for 3 years
ownership threshold mirroring the threshold requested by the proponent, even though the company-adopted
bylaw deviated from the specific terms of the proposal in various other respects. In February 2016, the SEC Staff
denied no-action relief to three companies that implemented proxy access with a different ownership threshold
44
(5%) than that sought by the proponent (3%). See our previous Sidley Update for more information.
The SEC Staff’s responses provide clarity to companies concerning their ability to exclude shareholder proxy
access proposals asking them to adopt proxy access with specified parameters by subsequently adopting their
own proxy access provisions. In this situation, the responses suggest that companies have some flexibility to
adopt proxy access bylaws tailored to their particular circumstances so long as they track the ownership threshold
and duration set forth in the proposal. Based on the recent SEC Staff determinations, no-action relief will be
available in this context even if the company’s proxy access bylaw (i) includes a limit on the number of
shareholders that may aggregate to form a nominating group (e.g., 20 versus an unlimited number per the terms
of the proposal) or (ii) includes a lower percentage or number of board seats available to proxy access nominees
than specified in the proposal (e.g., 20% (rounding down) versus “the greater of 25% of the board or two” per the
terms of the proposal). In August 2016, two additional companies sought no-action relief with respect to 3% for 3
years shareholder proxy access proposals on the basis of substantial implementation. The SEC Staff has not
responded to those requests as of the date of this report.
James McRitchie, the proponent at Whole Foods and several other companies that have since adopted proxy
access, expressed his disappointment with the SEC Staff’s responses, specifically their apparent conclusion that
the provision in his template proposal explicitly providing for no nominating group size limit is not an “essential
element” of the proposal. He vowed to file binding bylaw resolutions in the future at companies that have adopted
what he considers to be “proxy access lite bylaws” in an effort to “obtain the same robust proxy access promised
45
under vacated Rule [14a-11].” McRitchie’s initial attempts to reform “proxy access lite” saw a setback when his
proposal failed to receive majority support at Apple’s annual meeting in February 2016 (it received 33% support)
despite a favorable recommendation from ISS. His proposal had sought to amend Apple’s existing proxy access
bylaw to remove the group size limit of 20 and increase the number of board seats available to proxy access
nominees from 20% to the greater of 25% or 2 directors.
In July 2016, for the first time, the SEC Staff denied no-action relief to a company that sought to exclude a 3% for
3 years shareholder proposal under Rule 14a-8(i)(10) after finding itself “unable to conclude that H&R Block’s
46
proxy access bylaw compares favorably to with the guidelines of the proposal.” In that case, rather than a
proposal to adopt proxy access with specified parameters, the shareholder proposal submitted by McRitchie
requested that the board make four specific revisions to the company’s existing 3%/3 years/20%/20 proxy access
bylaw. In particular, the proponent requested that the bylaw be revised such that: (i) the number of proxy access
nominees would be the greater of 25% or 2; (ii) loaned shares would count toward the ownership threshold so
long as they are recallable, (iii) there be no limit on the size of the nominating group and (iv) there be no
restriction on the re-nomination of a proxy access nominee based on the number or percentage of votes received
in a prior election. The proposal received less than 30% support at H&R Block’s annual meeting on September 8,
2016 despite a favorable recommendation from ISS.
The SEC Staff’s denial of no-action relief to H&R Block suggests that companies will not be able to rely on
substantial implementation under Rule 14a-8(i)(10) as a basis to exclude shareholder proposals asking
companies to make specific revisions to their proxy access bylaws. Therefore, even the companies that were
granted no-action relief earlier this year should bear in mind that shareholders may submit proposals in the future
seeking to modify the terms of their proxy access bylaws. In June 2016, McRitchie submitted a shareholder
proposal to Microsoft Corporation asking its board to adopt “an enhancement package” of specific amendments
to its proxy access bylaw. Microsoft requested no-action relief from the SEC Staff on July 22, 2016, the day after
the H&R Block no-action response letter was issued, in connection with its proposed exclusion of the proposal
47
under Rule 14a-8(i)(10). In September 2016, two additional companies requested no-action relief with respect
48
to similar “enhancement package” proposals received from John Chevedden in August 2016. The SEC Staff
has not responded to those requests as of the date of this report.
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It is possible that others will join McRitchie in submitting future shareholder proposals that specifically seek
removal of the nominating group size limit or other modifications. The public pension funds led by New York City
Comptroller Stringer have also expressed concerns about certain “unworkable” proxy access provisions adopted
to date, including provisions which limit the number of shareholders who can aggregate to form a nominating
49
group. Comptroller Stringer’s template proxy access proposals for 2015 and 2016 do not limit the number of
shareholders that can comprise a nominating group. Even if shareholder proposals seeking revisions to existing
proxy access bylaws are not able to be excluded from annual meeting ballots, they are unlikely to be approved by
shareholders if the existing proxy access bylaws has standard terms (e.g., 3% for 3 years).
VOTING RESULTS ON PROXY ACCESS PROPOSALS
Key Highlights of Shareholder Proxy Access Proposal Voting Results
Shareholder Proxy Access Proposals
2014
2015
2016 (through 9/20)
• Voted On
18
91
81
• Passed
5
55
42
34%
55%
51%
• Average Support
Shareholder Proposals
81 shareholder proxy access proposals have been voted on so far in 2016, averaging support of approximately
51.2% of votes cast. 42 of the proposals received majority support, while 39 did not pass. Average support
declined in 2016 compared to 2015 because several targeted companies had adopted proxy access prior to their
2016 annual meetings. Average support at the 42 companies where proxy access proposals passed was 69%.
ISS supported all but two of the shareholder proposals. ISS recommended against the proposal at CSP Inc.
because its “greater of 20% or 2 directors” provision would have enabled a shareholder to gain control of 40% of
the company’s five-member board. ISS recommended against the proposal at Peoples Financial Services Corp.
because its “1.5% for 2 years” ownership threshold is “less robust than the prevalent market standards.”
50
Management recommended against all but five of the shareholder proposals.
91 shareholder proxy access proposals were voted on in 2015, averaging support of approximately 55% of votes
cast; 55 proposals (60%) received majority support while 36 (40%) did not pass. Management opposed all but
four of the proposals—it supported three of the proposals and provided no recommendation with respect to one
proposal. ISS supported all of the shareholder proposals, most of which included a 3% for 3 years ownership
51
threshold (such as Comptroller Stringer’s proposals).
Voting results on shareholder proxy access proposals appear to have been influenced by various factors:
Factors Increasing Shareholder Support
•
•
•
•
•
•
•
Factors Decreasing Shareholder Support
No competing management proxy access proposal on
the ballot
Company did not adopt proxy access prior to the meeting
•
Less insider ownership
More shareholders that vote in line with proxy advisory
firm recommendations
Less voting retail shareholders
Combative tone of corporate disclosure around proxy
access concept
Concerns relating to corporate performance, shareholder
rights and/or compensation
•
•
•
•
•
•
Competing management proxy access proposal on the
ballot
Company adopted proxy access prior to the meeting
and/or shareholder seeks to amend proxy access bylaw;
significantly lower support if previously adopted at 3%
ownership threshold
Greater degree of insider ownership
Less shareholders that vote in line with proxy advisory
firm recommendations
More voting retail shareholders
More conciliatory/open tone of corporate disclosure
around proxy access concept
Lack of concern relating to corporate performance,
shareholder rights and/or compensation
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Management Proposals
21 management proxy access proposals have been voted on so far in 2016, averaging support of 88% of votes
cast. Seventeen proposals (81%) passed while four (19%) did not pass. Of the four management proposals that
failed, two were competing with shareholder proposals with 3% (rather than 5%) ownership thresholds that
passed and two received majority support but fell short of the companies’ 75% and 80% supermajority vote
requirements. ISS recommended votes in favor of 18 of these proposals (which followed the 3% for 3 years
formulation) and against three of these proposals (two of which included a 5% for 3 years ownership threshold
and one of which specified an aggregation limit of only 10 shareholders).
12 management proxy access proposals were voted on in 2015, averaging support of 62% of votes cast. Seven
proposals (58%) passed while five (42%) did not pass (including one that received majority support but fell short
of the company’s supermajority vote requirement). ISS recommended votes in favor of five of these proposals
(which followed the 3% for 3 years formulation) and against seven of these proposals (six of which included a 5%
for 3 years ownership threshold; one included a 3% for 3 years threshold (as discussed below)).
Competing Shareholder and Management Proposals
So far in 2016, shareholders have voted on competing proxy access proposals at five companies, including two
companies (Chipotle Mexican Grill Inc. and SBA Communications Corporation) where competing proposals were
also on the ballots for the 2015 annual meeting. As shown in the table below, in 2016 the management proposal
passed at three companies and the shareholder proposal passed at two companies. At three companies, ISS
recommended votes in favor of both proxy access proposals indicating that the “proposals are not mutually
exclusive” and that “strong support for the shareholder proposal could convey to the board a preference for a
proxy access right without a limit on share aggregation, and one that does not contain added restrictions.”
2016 Competing Proposals
Shareholder Proposals
Company
Parameters
Chipotle
Mexican Grill,
Inc.
• 3%
Cummins Inc.
• 3 years
• 25% cap
Kate Spade &
Company
Knight
Transportation,
Inc.
SBA
Communications
Corporation
Average %
Support
• No limit
on size of
nominating
group
Amend bylaw
to reduce 5%
to 3%,
increase cap
to 25% and
eliminate limit
of 10
ISS
Rec.
%
Support
Parameters
ISS Rec.
%
Support
Subsequent
Adoptions
57.4
5% • 3 years • 20% cap •
limit of 20 (Binding)
Against
23.7
N/A
31.6
3% • 3 years • 25% cap (at
least 2) • limit of 20
(Advisory)
For
97.1
N/A
22.6
3% • 3 years • 20% cap (at
least 2) • limit of 20
(Binding)
For
81.8
3% • 3 years • 20% cap
(at least 2) • limit of 20
22.3
3% • 3 years • 20% cap (at
least 2) • limit of 20
(Binding)
For
93.7
Adopted on 5/12/16
3% • 3 years • 20% cap
(at least 2) • limit of 20
67.6
Approval of existing bylaw:
5% • 3 years • 20% cap (at
least 1) • limit of 10
29.4
Previously adopted on
7/28/15
5% • 3 years • 20% cap
(at least 1) • limit of 10
For
For
Management Proposals
40.3
Adopted on 5/19/16
Against
65.1
At seven companies shareholders voted on two proxy access proposals at the 2015 annual meeting—a
shareholder proposal with a 3% ownership threshold and a management proposal with an ownership threshold of
5% (at six companies) or 3% (at one company). ISS recommended in favor of all seven shareholder proposals.
ISS recommended against all seven management proposals, including at the one company which proposed a 3%
for 3 years threshold but imposed more restrictive terms than the shareholder proposal. Specifically, the
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management proposal at that company included a cap of 20% of board seats (compared with a 25% cap in the
shareholder proposal) and a limit of 20 shareholders in the nominating group (compared with no limit in the
shareholder proposal).
As shown in the table below, the management proposal passed at three companies, the shareholder proposal
passed at three companies, neither proposal passed at one company and there were no instances where both
proposals passed. As noted above, SEC Chair White stated in June 2015 that, despite the concerns of some
commentators, there did not appear to be shareholder confusion with respect to competing proposals.
2015 Competing Proposals
Shareholder Proposals
Management Proposals
%
Support
Parameters
%
Support
66.4
5% • 3 years • 20% cap •
monitoring peers and
soliciting shareholder input
when fixing limit (Advisory)
Subsequent
Adoptions
Adopted on 11/25/15
The AES
Corporation
36.2
3% • 3 years • 20% cap
• limit of 20
Chipotle
Mexican Grill,
Inc.
49.9
5% • 3 years • 20% cap •
limit of 20 (Binding)
34.7
N/A
Cloud Peak
Energy Inc.
71.1
5% • 3 years • 10% cap •
limit of 1 (Binding)
25.9
3% • 3 years • 20% cap
(at least 1) • limit of 20
43.6
5% • 3 years • 20% cap •
limit of 20 (Advisory)
35.0
3% • 3 years • 20% cap •
limit of 20 (Advisory)
70.3
46.3
5% • 3 years • 20% cap •
limit of 10 (Advisory)
51.7
Adopted on 7/28/15
5% • 3 years • 20% cap
(at least 1) • limit of 10
Visteon
Corporation
75.7
5% • 3 years • 20% cap •
monitoring peers and
soliciting shareholder input
when fixing limit (Advisory)
21.2
Adopted on 6/10/16
3% • 3 years • 20% cap
(or 25% if <10
directors) • limit of 20
Average %
Support
55.4
Company
Parameters
ISS
Rec.
ISS Rec.
Adopted on 10/20/15
• 3%
• 3 years
Exelon
Corporation
• 25% cap
Expeditors
International of
Washington, Inc.
• No limit
on size of
nominating
group
For
All
52.6
Against
All
Adopted on 4/26/16
3% • 3 years • 20% cap
(at least 2) • limit of 20
Adopted on 5/13/16
SBA
Communications
Corporation
3% • 3 years • 20% cap
• limit of 20
41.8
ADOPTION OF PROXY ACCESS PROVISIONS AND TYPICAL PARAMETERS
Pace of Proxy Access Adoptions
80
70
60
50
40
71
30
56
20
10
0
32
15
5
11
3
11
31
24
16
Pre-2015 Jan/Feb Mar/Apr May/Jun Jul/Aug Sep/Oct Nov/Dec Jan/Feb Mar/Apr May/Jun Jul/Aug
2015
2015
2015
2015
2015
2015
2016
2016
2016
2016
3
Sep
2016
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Since January 1, 2015, 263 companies have adopted proxy access, and they have done so in a range of
circumstances as described in the Appendix. All companies adopted proxy access in their bylaws except for one
company, which incorporated it into the certificate of incorporation upon its spin-off, and another company that
amended both its certificate of incorporation and bylaws to provide for proxy access. Four additional companies
have disclosed that they plan to adopt proxy access bylaws in connection with upcoming spin-offs.
More than 41% of companies in the S&P 500 have now adopted proxy access. According to SharkRepellent.net,
over 26% of Russell 1000 companies have adopted proxy access. Seventy-four companies adopted proxy access
without having received a known shareholder proxy access proposal—this trend continues to accelerate. The
uptick in adoptions is also attributable to negotiated settlements with shareholder proponents and board
responsiveness to majority-supported shareholder proposals in light of the ISS FAQs discussed above.
The Appendix highlights the key parameters of the proxy access provisions adopted since January 1, 2015,
including the minimum ownership threshold, maximum percentage of board seats open to proxy access nominees
and maximum number of shareholders that can comprise a nominating group. While market practice continues to
develop, the proxy access provisions adopted by companies since January 1, 2015 include several elements that
have emerged as typical, although there are some variations. The majority of proxy access provisions adopted in
2016 include the following terms: 3% for 3 years for up to 20% of the board (at least 2 directors) with a nominating
group size limit of 20.
The Appendix also highlights select terms relating to the treatment of loaned shares, post-meeting ownership
requirements, third-party compensation arrangements, nomination deadlines, exclusion of proxy access
nominees if a director has been nominated under the advance notice provision, “creeping control” limitations and
re-nomination restrictions. In addition, proxy access provisions delineate various procedural and informational
requirements, proxy access nominee eligibility conditions and circumstances in which a company will not be
required to include a proxy access nominee in its proxy materials.
A MOVING TARGET – AMENDMENTS TO PREVIOUSLY ADOPTED PROVISIONS
At three companies that adopted a proxy access bylaw in 2015 prior to the annual meeting, their respective
boards subsequently amended the bylaws after shareholder proxy access proposals with less restrictive terms
passed at the annual meetings. Specifically, CF Industries Holdings, Inc., Marathon Oil Corporation and The
Priceline Group Inc. amended their proxy access bylaws to (i) decrease the required ownership percentage from
5% to 3% and (ii) change the maximum percentage of board seats available to proxy access nominees from 20%
to 25%. Amendments to The Priceline Group Inc.’s bylaw also eliminated the 20 shareholder limit on forming a
group for purposes of meeting the required ownership percentage and made other modifications.
More than 20 other companies have amended their proxy access bylaws in 2016, several of which disclosed that
the amendments resulted from shareholder outreach and evolving market practices. In addition to the three
companies named in the previous paragraph, seven companies have amended their proxy access bylaws in 2016
to decrease the required ownership percentage from 5% to 3%, which has become widely accepted (leaving just
four companies that have adopted a 5% ownership percentage). Certain amendments presumably were made in
exchange for withdrawal of shareholder proxy access proposals, such as (i) increasing the maximum number of
proxy access nominees to 25% of the board and/or providing for a minimum of 2 proxy access nominees and (ii)
removing or raising the cap on the number of shareholders that may comprise a nominating group. Other
amendments were made in response to ISS’s new policy with respect to board responsiveness to a majoritysupported proxy access proposal which may impact director elections at future annual meetings. Several of those
amendments directly addressed provisions that ISS views as “problematic” by:
•
Clarifying that certain related funds will count as one shareholder for purposes of the applicable
shareholder group size limit.
•
No longer requiring the company to disclose its intentions to maintain ownership of the requisite number
of shares for one year after the annual meeting.
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•
Explicitly counting loaned shares toward the 3% ownership threshold or extending the time by which
loaned shares can be recalled in order to count toward the threshold from 3 to 5 business days.
•
Requiring disclosure of third-party compensatory arrangements but no longer prohibiting them.
•
No longer restricting the re-nomination of a proxy access nominee who failed to receive at least 25%
support in the past 2 years.
•
No longer including a creeping control limitation which would have banned a successful nominating
shareholder from using proxy access for 2 years.
At Cloud Peak Energy Inc., the amendments to remove restrictive provisions were sufficient to cause ISS to
reverse its negative vote recommendations against government committee members.
Finally, a few companies amended their proxy access bylaws in the summer of 2016 after shareholder proxy
access proposals failed at their 2016 annual meetings but received significant (i.e., >45%) shareholder support.
Typical Provisions
Nomination Deadline; Limited to Annual Meetings
Requests to include proxy access nominees in the company’s proxy materials typically must be received within a
window of 120 to 150 days before the anniversary of (i) the date on which the company released its proxy
statement for the previous year’s annual meeting (198 out of 263 companies (75%)) or (ii) the previous year’s
annual meeting (18 out of 263 companies (7%)). Less commonly, the deadline is a window of 90 to 120 days
before the anniversary of the previous year’s mailing date (6 out of 263 companies (2%)) or annual meeting date
(17 out of 263 companies (6%)). 9 out of 263 companies (3%) require that requests be received prior to the date
that is 120 days before the date the company released its proxy statement to shareholders in connection with the
previous year’s annual meeting (i.e., the same as the deadline for shareholder proposals under Exchange Act
Rule 14a-8, which does not incorporate a window). Proxy access provisions typically specify that proxy access
may only be used with respect to director elections at annual meetings (but not special meetings) of shareholders.
Several companies that adopted proxy access later in 2015 or early in 2016 specified that the right cannot be
used until 2017.
Net Long Beneficial Ownership of 3% or 5%
3% for 3 years is by far the most common ownership threshold (259 out of 263 companies (98%)), although a
small number of companies have adopted a 5% for 3 years threshold (4 out of 263 companies (2%)). As
discussed above, 10 companies that initially adopted proxy access at a 5% ownership threshold subsequently
amended their bylaws to decrease the required ownership percentage to 3%.
A nominating shareholder is typically deemed to own only those outstanding common shares of the company as
to which the shareholder possesses both the full voting and investment rights pertaining to the shares, and the full
economic interest in such shares. For example, shares subject to any derivative arrangement entered into by the
shareholder or any of its affiliates would not qualify as eligible ownership for proxy access purposes. Loaned
shares explicitly count as “owned” for purposes of meeting the ownership threshold in most of the proxy access
provisions (244 out of 263 companies (93%)), subject to certain conditions. Where loaned shares count toward
ownership, most provisions require that the nominating shareholder has the power to recall the loaned shares
within a specified time frame (most commonly, on three or five business days’ notice). Several provisions require
that the nominating shareholder has actually recalled the loaned shares within a specified time frame or prior to a
specified time (e.g., by the record date or prior to submission of the nomination notice).
Holding Period
All of the proxy access provisions adopted since January 1, 2015 provide that the nominating shareholder must
own the requisite amount of shares for at least 3 years. A nominating shareholder is typically required to continue
to own the requisite amount of shares until the nomination date, the record date and annual meeting date and, at
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89 out of 263 companies (34%), is required to represent that it intends to, or in some cases will, continue to own
the requisite shares for at least one year after the annual meeting.
Nominee Limit and Procedure for Selecting Candidates if Nominee Limit is Exceeded
Many companies have limited the number of board seats available to proxy access nominees to 20% of the board
(59 out of 263 companies (22%)), 12 of which provide for a minimum of one proxy access nominee. Later in 2015
and into 2016, companies are increasingly limiting the number of board seats available to proxy access nominees
to the greater of 2 or 20% of the board (170 out of 263 companies (65%)). Some companies have adopted a 25%
cap (34 out of 263 companies (13%)), 12 of which provided for a minimum of 2 proxy access nominees. In most
cases, if the calculation of the maximum number of proxy access nominees does not result in a whole number,
the maximum number of proxy access nominees that the company would be required to include in its proxy
materials would be the closest whole number below the applicable percentage (e.g., 20% or 25%).
Nearly all proxy access provisions provide that, if a vacancy occurs on the board after the nomination deadline but
before the date of the annual meeting, and the board decides to reduce the size of the board in connection with
the vacancy, the nominee limit would be calculated based on the reduced number of directors. Any proxy access
nominee who is either subsequently withdrawn or included by the board in the proxy materials as a boardnominated candidate typically would count against the nominee limit (including, in some cases, for a specified
number of future years). Many proxy access provisions provide that the maximum number of proxy access
nominees that the company would be required to include in its proxy materials will be reduced by the number of
director candidates nominated by any shareholder pursuant to the company’s advance notice provisions (63 out
of 263 companies (24%)).
Any nominating shareholder that submits more than one nominee would be required to provide a ranking of its
proposed nominees. If the number of proxy access nominees from all nominating shareholders exceeds the
nominee limit, the highest ranking qualified person from the list proposed by each nominating shareholder,
beginning with the nominating shareholder with the largest qualifying ownership and proceeding through the list of
nominating shareholders in descending order of qualifying ownership, would be selected for inclusion in the proxy
materials, with the process repeating until the nominee limit is reached.
Limitation on the Size of the Nominating Group
All but six companies limit the number of shareholders that are permitted to comprise a nominating group. A
nominating group size limit of 20 is by far the most common (237 out of 263 companies (90%)); however, seven
companies set a lower limit (e.g., 5, 10 or 15) and thirteen companies set a higher limit (e.g., 25, 30 or 50). Proxy
access provisions often also provide that a shareholder cannot be a member of more than one nominating group.
Many companies require that one group member be designated as authorized to act on behalf of all other group
members. It is typical to provide that members of the same fund family count as one shareholder for purposes of
this limit, particularly in light of current ISS policy which would deem “especially problematic” a provision that
would treat such individual funds as separate shareholders.
Information Required of All Nominating Shareholders
Each nominating shareholder is typically required to provide certain information to the company, including:
•
Verification of, and information regarding, the stock ownership of the shareholder as of the date of the
submission and the record date for the annual meeting (including in relation to derivative positions).
•
The Schedule 14N filed by the shareholder with the SEC.
•
Information regarding each proxy access nominee, including biographical and stock ownership
information.
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•
The written consent of each proxy access nominee to (i) be named in the proxy statement, (ii) serve as a
director if elected and (iii) the public disclosure of the information provided by the shareholder regarding
the proxy access nominee.
•
A description of any arrangement with respect to the nomination between the shareholder and any other
person.
•
Any other information relating to the shareholder that is required to be disclosed pursuant to Section 14 of
the Exchange Act, and the rules and regulations promulgated thereunder.
•
The written consent of the shareholder to the public disclosure of the information provided to the
company.
Nominating shareholders are generally permitted to include in the proxy statement a 500-word statement in
support of their nominees. The company may omit any information or statement that it, in good faith, believes
would violate any applicable law or regulation.
Nominating shareholders are also typically required to make certain written representations to and agreements
with the company, including in relation to:
•
Lack of intent to change or influence control of the company.
•
Intent to maintain qualifying ownership through the annual meeting date and, at 89 out of 263 companies
(34%), for a specified timeframe (e.g., one year) beyond the meeting date.
•
Refraining from nominating any person for election to the board other than its proxy access nominees.
•
Intent to be present in person or by proxy to present its nominees at the meeting.
•
Not participating in any solicitation other than that relating to its nominees or board nominees.
•
Not distributing any form of proxy for the annual meeting other than the form distributed by the company.
•
Complying with solicitation rules and assuming liability and providing indemnification relating to the
nomination, if required.
•
The accuracy and completeness of all information provided to the company.
Information Required of All Proxy Access Nominees
Each proxy access nominee is typically required to make certain written representations to and agreements with
the company, including in relation to:
•
Acting in accordance with his or her duties as a director under applicable law.
•
Not being party to any voting agreements or commitments as a director that have not been disclosed to
the company.
•
Not being party to any compensatory arrangements with a person or entity other than the company in
connection with such proxy access nominee’s candidacy and/or service as a director that have not been
disclosed to the company.
•
Complying with applicable laws and stock exchange requirements and the company’s policies and
guidelines applicable to directors.
•
The accuracy and completeness of all information provided to the company.
Proxy access nominees are also typically required to submit completed and signed D&O questionnaires.
Several companies have adopted a provision requiring each proxy access nominee to submit an irrevocable
resignation to the company in connection with his or her nomination, which would become effective upon the
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board determining that certain information provided by the proxy access nominee in connection with the
nomination is untrue or misleading or that the nominee or the nominating shareholder breached any obligations to
the company.
Exclusion or Disqualification of Proxy Access Nominees
It is typical for proxy access provisions to permit exclusion of proxy access nominees from the company’s proxy
statement if any shareholder (or at some companies, specifically the nominating shareholder) has nominated any
person (or at some companies, one or more of the proxy access nominees) to the board pursuant to the
company’s advance notice provisions (212 out of 263 companies (81%)).
In addition, the company is typically not required to include a proxy access nominee in the company’s proxy
materials if any of the following apply:
•
The nominee withdraws, becomes ineligible or does not receive at least a specified percentage (most
commonly 25%) of the votes cast at his or her election. Such person is typically ineligible to be a proxy
access nominee for the 2 annual meetings following such vote.
•
The nominating shareholder participates in the solicitation of any nominee other than its nominees or
board nominees.
•
The nominee is or becomes a party to a compensatory arrangement with a person or entity other than the
company in connection with such nominee’s candidacy or service as a director that has not been
disclosed to the company or, at 42 out of 263 companies (16%), under any circumstances, whether or not
disclosed.
•
The nominee is not independent under any applicable independence standards. Some companies require
nominees to meet heightened standards of independence applicable to audit committee and/or
compensation committee members under SEC, stock exchange and/or IRS rules.
•
The election of the nominee would cause the company to violate its charter or bylaws, any stock
exchange requirements or any laws, rules or regulations.
•
The nominee has been an officer or director of a competitor (often as defined in Section 8 of the Clayton
Antitrust Act of 1914) within the past three years.
•
The nominee is the subject of a pending criminal proceeding or has been convicted in a criminal
proceeding within the past 10 years.
•
The nominee is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated
under the Securities Act.
•
The nominee or the nominating shareholder has provided false or misleading information to the company
or breached any obligations under the proxy access provision.
Proxy access provisions at 215 out of 263 companies (82%) include “creeping control” limitations which take
various forms. A proxy access nominee elected by shareholders will typically count towards the proxy access
nominee limit in future years (often 2 or 3 years after election). In addition, the limit is reduced at some companies
by the number of director candidates that will be included in the proxy statement as unopposed as a result of an
agreement, arrangement or other understanding between the company and a shareholder. At some companies, if
a nominating shareholder’s nominee is elected to the board, then such nominating shareholder may not utilize
proxy access for the following 2 or 3 annual meetings (other than with respect to the nomination of the previously
elected proxy access nominee).
The board or the chairman of the annual meeting may declare a director nomination by a shareholder to be
invalid, and such nomination may be disregarded, if the proxy access nominee or the nominating shareholder
breaches any obligations under the proxy access provision or the nominating shareholder does not appear at the
annual meeting in person or by proxy to present the nomination. Many proxy access provisions grant the board
authority to interpret the proxy access provision and make related determinations in good faith.
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POTENTIAL IMPACT OF PROXY ACCESS ON CORPORATE GOVERNANCE
It remains to be seen what impact proxy access will have on corporate governance. At companies where proxy
access has been adopted, boards and management may become more focused on the quality of shareholder
relations, communications and engagement, in an effort to avoid a contested election against one or more proxy
access nominees.
One of the benefits of the board self-determination that occurs absent a proxy contest or proxy access situation is
the ability of the board to ensure that its composition is aligned with its view of what the company needs for
effective oversight. This is not a simple matter given the mosaic of skill sets, experience and diversity that is
needed on a board.
An elected proxy access director will owe the same fiduciary duties as the other directors, though some may view
proxy access directors as potentially having an allegiance to the nominating shareholder’s interests. Depending
on the circumstances, however, there may be a greater risk that the proxy access director is viewed by the rest of
the board as an outsider or even an adversary.
Concerns about how proxy access may impact board dynamics include:
•
Board fragmentation. The board may become dominated by factions that are aligned with particular
segments of the shareholding body rather than the shareholding body as a whole.
•
Board dysfunction. Distrust among directors may develop and lead to board dysfunction with an
associated negative impact on the quality of board oversight.
Concerns about how proxy access may impact a company in general include:
•
A higher risk of legal challenges. Disagreement among directors may lead to a greater risk of legal
challenges, including challenges in contexts that lack business judgment rule protection, subjecting
transactions to heightened standards of review.
•
Joint shareholder action. Special interest shareholders could coordinate to increase their representation
on the board without the shareholding body at large understanding the potential for joint action.
•
Increased costs and distractions. Proxy access can lead to increased costs and distractions without
delivering improvements in company or board performance.
•
Potential withdrawal of existing directors. Incumbent directors may choose to resign rather than serve
alongside a particular proxy access director.
INTERNATIONAL PERSPECTIVES ON PROXY ACCESS
In considering how proxy access may impact corporate governance in the U.S., it may be helpful to consider
international experiences. The CFA Institute Report on Proxy Access indicates that proxy access has
historically been used sparingly to elect directors in countries that have adopted proxy access, including
Canada, the UK, Australia, France, Germany, the Netherlands, Norway, Switzerland and Brazil. For example,
the report cites to a 2009 finding that proxy access nominations at Canadian companies are often withdrawn
prior to a vote because companies are “more willing and more likely to reach agreements with investors to
52
avoid a vote.”
The CFA Institute Report on Proxy Access also evaluates the relationship between company returns and
proxy access elections in Canada, the UK and Australia, and states that “[t]o the extent that proxy access
provides governance benefits from a policy perspective, a preliminary analysis suggests that adverse financial
53
impacts are negligible.”
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PRACTICAL CONSIDERATIONS
Notwithstanding the concerns outlined above, proxy access will inevitably soon play a larger role in corporate
governance as a result of private ordering. Proxy access will likely follow the pattern of majority voting in
uncontested director elections and, given the current rate of adoption, become a majority practice among S&P
500 companies within the next six months.
Companies have several alternatives when considering whether and when to adopt proxy access. Companies
with a majority-supported proxy access proposal should consider proxy advisor policies (including the ISS FAQs
discussed above) when implementing proxy access—specifically, the likelihood of negative vote
recommendations against directors if the board has “failed to act” on a majority-supported shareholder proposal.
We expect that many companies will continue to follow a “wait-and-see” approach, particularly if they have not
previously received a shareholder proxy access proposal; however, the trend towards adopting proxy access
without receipt of a shareholder proposal continues to accelerate. Some companies may choose to proactively
adopt a proxy access bylaw by board action or by requesting shareholder approval of a bylaw (or charter)
amendment at the next annual meeting, in either case with or without a prior public commitment to adopt proxy
access. This may help position the company as a governance leader—particularly if no shareholder proposal has
been received—and, depending on the specific provisions, may minimize the likelihood of receiving a future
shareholder proxy access proposal. A company taking this approach should ensure that it can justify any proxy
access provision with thresholds that differ from the following terms which have become standard: 3% for 3 years
for up to 20% of the board (at least 2 directors) with a group size limit of 20 (e.g., by disclosing preferences of its
shareholders as communicated to the company through engagement).
If faced with a shareholder proxy access proposal, counsel should be prepared to help the board and
management consider the full range of options available given the company’s circumstances. A proxy access
proposal with a 3% for 3 years ownership threshold is likely to receive majority shareholder support at a company
that has not previously adopted proxy access. Therefore, a company may consider adopting proxy access on its
own terms rather than putting the shareholder proposal up for a vote. Doing so may enable a company to
negotiate a withdrawal from the proponent. Alternatively, in light of the SEC Staff’s recent grants of no-action relief
on the basis of “substantial implementation,” a company will likely be able to exclude the shareholder proposal so
long as the company’s proxy access bylaw tracks the proposal’s 3% for 3 years ownership threshold. As
companies are considering these alternatives, they should:
•
Follow developments in this area and keep the nominating and corporate governance committee and the
full board generally apprised.
•
Know the preferences of their shareholder base (as evidenced in proxy voting policies and other public
statements, and voting history on proxy access proposals) and engage with shareholders with respect to
proxy access.
•
Keep abreast of proxy advisory firm policies and guidance relating to proxy access.
•
Stay apprised of the key parameters and other terms upon which companies are adopting proxy access.
•
Be aware of the SEC Staff’s position with respect to requests to exclude shareholder proxy access
proposals and shareholder proposals seeking to amend proxy access bylaws.
•
Review the advance notice and director qualification provisions in their bylaws and consider whether and,
if so, how such provisions may be aligned with a proxy access provision if implemented. In addition,
companies that have cumulative voting in place may wish to consider eliminating (or requiring suspension
of) cumulative voting if a proxy access nominee is included in the company’s proxy materials.
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If you have any questions regarding this Sidley Corporate Governance Report, please contact the Sidley lawyer with whom
you usually work, or
Holly J. Gregory
Partner
[email protected]
+1 212 839 5853
John P. Kelsh
Partner
[email protected]
+1 312 853 7097
Rebecca Grapsas
Counsel
[email protected]
+1 212 839 8541
Claire H. Holland
Special Counsel
[email protected]
+1 312 853 7099
Thomas J. Kim
Partner
[email protected]
+1 202 736 8615
SIDLEY CORPORATE GOVERNANCE AND EXECUTIVE COMPENSATION PRACTICE
Lawyers in Sidley’s Corporate Governance and Executive Compensation practice regularly advise corporate
management, boards of directors and board committees on a wide variety of corporate governance matters,
including shareholder activism and engagement, fiduciary duties, board oversight responsibilities, board
investigations and special committees, SEC disclosure, legal compliance, corporate responsibility, board
evaluation, board and committee structures and issues arising under Sarbanes-Oxley and Dodd-Frank. Our
advice relates to the procedural aspects as well as the legal consequences of corporate and securities
transactions and other corporate actions, including takeover defenses, proxy contests, SEC filings and disclosure
issues, stock option issues and general corporate law matters. Our broad client base allows us to provide advice
regarding best practices and trends in such matters as directors’ and officers’ responsibilities, board and
committee practices, disclosure controls and procedures, internal controls, executive compensation and other
matters.
ENDNOTES
1
Proxy Access in the United States: Revisiting the Proposed SEC Rule, CFA Institute (Aug. 2014) (the “CFA Institute Report on Proxy
Access”), available here.
2
R Street Shorts: Critiquing the CFA Institute’s Report on Proxy Access, Bernard S. Sharfman (Mar. 2016), available here.
3
SEC Release No. 33-9136, Facilitating Shareholder Director Nominations (Aug. 25, 2010) (the “SEC Proxy Access Release”), available here.
4
Business Roundtable and Chamber of Commerce v. Securities and Exchange Commission (D.C. Cir. Jul. 22, 2011), available here.
5
In response to questions from U.S. House of Representatives Democrats during a congressional hearing in March 2015, SEC Chair White
testified that the SEC has no “current intention” to adopt a mandatory proxy access rule. Chair White pointed to the success of the current
shareholder proposal process and indicated that the SEC is very closely monitoring the private ordering process to see the direction it takes.
Hearing entitled “Examining the SEC’s Agenda, Operations and FY 2016 Budget Request” before the Committee on Financial Services of the
United States House of Representatives (Mar. 24, 2015), available here. In July 2015, the SEC posted to its website a working paper relating
to proxy access by two economists in the SEC’s Division of Economic and Risk Analysis and a Penn State professor. The study found that the
private ordering process for proxy access increases shareholder value (as indicated by such increases at firms targeted by Comptroller
Stringer’s proxy access campaign) but that it “may lead to a second best outcome” as compared to universally mandated proxy access—in
other words, private ordering may not efficiently deliver proxy access at the companies that need it most. The paper identifies three key
findings:
•
Shareholder proponents do not disproportionately target the companies that the market expects to benefit most from proxy access
(as measured by stock price returns at the time the SEC announced that it would stay the effectiveness of the now-vacated 2010
proxy access rule).
•
Management is more likely to resist shareholder proposals at companies that stand to benefit more from proxy access.
•
Shareholder proposals have been converging to standard terms (e.g., the 3% for 3 years terms of the SEC’s 2010 rule), which
suggests that the private ordering process is not tending towards the delivery of customized, company-specific solutions.
Tara Bhandari, Peter Iliev and Jonathan Kalodimos, Public versus Private Provision of Governance: The Case of Proxy Access (Jul. 24,
2015), available here.
A business law professor recently published a paper critiquing this working paper and arguing that its results “lack external validity” and
therefore cannot be generalized to a broader population of public companies. What Shareholder Proposals on Proxy Access Tell us About its
Value, Bernard S. Sharfman, Yale Journal on Regulation Online (Aug. 4, 2016), available here.
In September 2016, the authors of the 2015 working paper published another working paper providing new evidence on the effectiveness of
the shareholder proposal process by reference to the private ordering process for proxy access. The paper confirmed certain findings from the
2015 paper and described additional findings, as follows:
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•
Shareholder value increased by 53 basis points on average at companies targeted with proxy access proposals. They found the
strongest positive returns at companies for which proxy access was expected to be valuable, and much lower returns at companies
for which proxy access was not expected to be valuable.
•
Shareholder proposals have been converging to standard terms and shareholder proponents do not disproportionately target
companies that the market expects to benefit most from proxy access.
•
Management is more likely to resist shareholder proposals at companies that stand to benefit more from proxy access, suggesting
that agency problems make it more difficult for shareholder proposals to deliver changes where they are needed.
•
Conflicting shareholder interests affect voting outcomes for proxy access proposals.
Tara Bhandari, Peter Iliev and Jonathan Kalodimos, Governance Changes Through Shareholder Initiatives: The Case of Proxy Access (Sep.
1, 2016), available here.
6
SEC Proxy Access Release at 17.
7
“The bylaws may provide that if the corporation solicits proxies with respect to an election of directors, it may be required, to the extent and
subject to such procedures or conditions as may be provided in the bylaws, to include in its proxy solicitation materials (including any form of
proxy it distributes), in addition to individuals nominated by the board of directors, 1 or more individuals nominated by a stockholder.”
Excerpted from Section 112 of the Delaware General Corporation Law.
8
North Dakota Publicly Traded Corporations Act, N.D. Cent. Code § 10-35-08, available here. See American Railcar Industries, Inc., Definitive
Proxy Statement (filed Apr. 30, 2009); Carl Icahn owned a controlling interest at the time of reincorporation in June 2009.
9
In the event that a company was required to include a proxy access nominee on its ballot, Broadridge has indicated in preliminary
conversations that its systems would handle such a ballot in the same manner as a universal proxy card. In this situation, Broadridge can
configure Internet voting so that a voter can only vote “for” the number of directors that corresponds to the number of board seats up for
election. Paper ballots are processed manually. Telephone voting is not available. There are open issues for the SEC and others to consider
with respect to the order of nominees and whether dissident nominees can be highlighted or differentiated in some way on the proxy card
(e.g., in the event that the nominees are listed in alphabetical order).
10
Comptroller Stringer, NYC Pension Funds Launch National Campaign to Give Shareowners a True Voice in How Corporate Boards Are
Elected, news release (Nov. 6, 2014), available here.
11
Comptroller Stringer, New York City Funds, Announce Expansion of Boardroom Accountability Project, news release (Jan. 11, 2016),
available here.
12
These binding proposals failed to receive majority support at Cabot Oil & Gas Corporation and Noble Energy, Inc.
13
Comptroller Stringer, New York City Funds: Boardroom Accountability Enters Next Phase as Campaign Achieves Critical Mass, news
release (Apr. 26, 2016), available here.
14
BlackRock, Proxy Voting Guidelines for U.S. Securities (Feb. 2015) at 7, available here.
15
CalPERS Highlights Outcome of Proxy Voting Initiatives, news release (Jul. 22, 2015), available here.
16
CalPERS, Global Governance 2016 Proxy Voting Priorities (Feb. 16, 2016) at 12, available here.
17
CalPERS, Global Governance Principles (last updated Mar. 14, 2016) at 8, available here.
18
CalSTRS, Corporate Governance Principles (last updated July 14, 2016) at 13, available here.
19
State Street Global Advisors, US Proxy Voting and Engagement Guidelines (Mar. 2016) at 4, available here.
20
See Remarks by Bess Joffe of TIAA-CREF, Proxy Access: The Halftime Show; webcast panel hosted by TheCorporateCounsel.net (Mar.
24, 2015).
21
T. Rowe Price, Proxy Voting Policies, available here.
22
Carpenters Suggests Zombie Director Trigger for Using Proxy Access, CII Governance Alert (Oct. 15, 2015).
23
Vanguard, Proxy Voting Guidelines (last updated Feb. 2016), available here.
24
Fidelity, Corporate Governance and Proxy Guidelines, available here.
25
Despite JPMorgan Chase & Co.’s adoption of proxy access at the 3% for 3 years ownership threshold, J.P. Morgan Asset Management
voted against 3% for 3 years shareholder proxy access proposals in 2015 consistent with its Global Proxy Voting Procedures and Guidelines
(Apr. 1, 2016), available here, which indicate that it will generally support proposals at the 5% for 3 years level.
26
Council of Institutional Investors, Corporate Governance Policies (last updated Apr. 1, 2015), available here.
27
Council of Institutional Investors, Proxy Access: Best Practices (Aug. 2015), available here.
28
Investor Group Challenges Access to Companies’ Boards, Wall Street Journal (Aug. 4, 2015), available here.
29
Broadridge Financial Solutions and PricewaterhouseCoopers, 2016 Proxy Season Review (3rd ed. 2016), available here.
30
ISS, 2016 U.S. Summary Proxy Voting Guidelines (last updated Feb. 23, 2016) at 22, available here.
31
ISS launched its annual policy survey (available here) in August 2015 asking: If a board adopts proxy access with material restrictions not
contained in a majority-supported shareholder proposal, which types of restrictions should be viewed as problematic enough to call into
question the board’s responsiveness and potentially warrant “withhold” or “against” votes against directors? See Sidley Update, ISS 2016
Proxy Voting Policy Formulation Underway (Aug. 13, 2015), available here. ISS provided the following examples of “potentially problematic”
restrictions:
•
Ownership thresholds in excess of 3% or 5%.
Sidley Austin LLP
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•
Ownership duration greater than 3 years.
•
Aggregation limit of less than 20 shareholders.
•
Cap on proxy access nominees set at less than 20% of the existing board (rounded down).
•
More restrictive advance notice requirements.
•
Information disclosures that are more extensive than those required of the company’s nominees, by the company, the SEC or
relevant exchanges.
•
Re-nomination restrictions in the event a proxy access nominee fails to receive a stipulated level of support or withdraws his or her
nomination.
•
Restrictions on compensation of proxy access nominees by nominating shareholders.
In September 2015, ISS published the results of its annual policy survey. ISS, 2015-2016 ISS Global Policy Survey – Summary of Results
(Sep. 28, 2015) at 8 and 19, available here. A majority of investor respondents were of the view that ISS should issue negative vote
recommendations against directors if the ownership threshold exceeds 3% (72% of investor respondents) or 5% (90%), if the holding period
exceeds 3 years, if the size of the nominating group is fewer than 20 and/or if the cap on the number of proxy access nominees is less than
20% of the current board size. Company respondents generally did not agree that directors should be penalized for imposing restrictions on
proxy access after shareholders had approved a shareholder proxy access proposal, although a slight majority agreed that votes against
directors could be warranted if the company established an ownership threshold greater than 5%.
32
ISS, U.S. Proxy Voting Policies and Procedures (Excluding Compensation-Related) – Frequently Asked Questions (last updated Mar. 14,
2016) at 19 and 28, available here.
33
ISS, Beyond the Basics: An In-Depth Review of the Secondary Features of Proxy Access Bylaws, Alexandra Higgins and Peter Kimball
(August 2016).
34
ISS, ISS Governance QuickScore 3.0 (last updated Sep. 2016), available here.
35
ISS 2017 Policy Survey, available here.
36
Glass Lewis, 2016 Proxy Season Proxy Paper Guidelines: United States at 21 and 22, available here, and Glass Lewis, 2016 Proxy Season
Proxy Paper Guidelines: Shareholder Initiatives at 3 and 6, available here.
37
Whole Foods Market, Inc., SEC No-Action Letter (Dec. 1, 2014), available here.
38
No-Action Relief Regarding Conflicting Proposals to Be Unavailable During 2015 Proxy Season, Sidley Update (Jan. 21, 2015), available
here.
39
Statement from Chair White Directing Staff to Review Commission Rule for Excluding Conflicting Proxy Proposals (Jan. 16, 2015), available
here, and Letter from the SEC’s Division of Corporation Finance to James McRitchie (Jan. 16, 2015), available here. Prior to its annual
meeting (which it postponed to September 2015), effective June 26, 2015, Whole Foods’ Board of Directors approved bylaw amendments
giving an eligible shareholder, or group of up to 20 shareholders, owning 3% or more of the company’s stock for at least 3 years the right to
nominate and include in the company’s proxy materials directors constituting up to 20% of the board seats (but not less than one director).
McRitchie withdrew his proposal, even though he had sought a 25% cap on the number of board seats and no limit on the number of
participants comprising a nominating group.
40
Building Meaningful Communication and Engagement with Shareholders, Speech by SEC Chair Mary Jo White to the Society of Corporate
Secretaries and Governance Professionals (Jun. 25, 2015), available here.
41
SEC Staff Legal Bulletin No. 14H (CF), Shareholder Proposals (Oct. 22, 2015), available here.
42
SEC Issues New Guidance on Excludability of Shareholder Proposals, Sidley Update (Oct. 23, 2015), available here.
43
General Electric Company, SEC No-Action Letter (Mar. 3, 2015), available here.
44
SEC Grants No-Action Relief for “Substantially Implemented” Shareholder Proxy Access Proposals–With Some Exceptions, Sidley Update
(Feb. 19, 2016), available here.
45
“Substantial Implementation” Will Backfire, blog post by James McRitchie (Mar. 21, 2016), available here.
46
H&R Block, Inc., SEC No-Action Letter (Jul. 21, 2016), available here.
47
Microsoft Corporation, Incoming Request for SEC No-Action Letter (Jul. 22, 2016), available here.
48
OshKosh Corporation, Incoming Request for SEC No-Action Letter (Sep. 20, 2016), available here, and Walgreens Boots Alliance, Inc.,
Incoming Request for SEC No-Action Letter (Sep. 19, 2016), available here.
49
Remarks by Michael Garland, Assistant Comptroller for Corporate Governance and Responsible Investment, New York City Office of the
Comptroller, at a meeting of the SEC Investor Advisory Committee (Jul. 16, 2015).
50
Management made no recommendation at NRG Energy, Inc. and Nasdaq, Inc. and recommended that shareholders vote in favor of the
shareholder proposals at Marlin Business Services Corp., PTC Therapeutics, Inc. and Urban Outfitters, Inc.
51
In 2014, 18 shareholder proxy access proposals were voted on and averaged support of approximately 34% of votes cast. 5 proposals
passed, each of which included a 3% for 3 years ownership requirement. The 8 proposals that deviated from that formulation received
average support of only 9% of votes cast.
52
CFA Institute Report on Proxy Access at Appendix D, citing a study by Jun Yang, Zengxiang Wang, and Yunbi An, An Empirical Analysis of
Canadian Shareholder Proposals (Jul. 20, 2009), available here.
53
CFA Institute Report on Proxy Access at 17-21.
Sidley Austin LLP
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
> of 2
or 20%:
170
(65%)
TOTALS
(out of 263
companies)
3%:
259
(98%)
5%:
4
(2%)
Group
Size
Limit
<20:
7 (3%)
20%:
59
(22%)
20: 237
(90%)
> of 2
or 25%:
12 (5%)
>20 and
None:
19 (7%)
Loaned
Shares
Count as
“Owned”
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Yes:
244
(93%)
Yes:
89
(34%)
Yes:
42
(16%)
No:
19
(7%)
No:
174
(66%)
No:
221
(84%)
Nomination Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days Prior
to Annual
Mtg.
Ann’y
Overall:
219
(83%)
Overall:
44 (17%)
Of the
219:
120-150:
198
(90%)
Other:
21 (10%)
25%:
22 (8%)
SEC Vacated
Exchange Act
Rule 14a-11
(for reference)
3%
25%
None
Yes, must
be
recalled
to count
as owned
Yes,
required
statement
of intent
to
continue
ownership
after
election
No, neither
disclosure
nor
prohibition
of comp.
arrgmts.
was
included in
14a-11
120-150
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Of the 44:
90-120:
17 (39%)
212 (81%)
120-150:
18 (41%)
63 (24%)
Creeping Control
Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Yes:
215
(82%)
Yes:
186
(71%)
No:
48
(18%)
No:
77
(29%)
None
None
Circumstances
of Adoption
Varied
Other:
9 (20%)
Nominating
SH
nominates
any nominee
N/A
Sidley Austin LLP
Page 27
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Proxy Access
Unavailable if Advance
Notice Nomination
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Adopted and
shareholder proposal
was withdrawn
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
• Successful nominating
shareholder may not
nominate (2 years)
• 25% (2
years)
• Nom’g SH
may not
nominate
if nominee
received
<25%
support (1
year)
Other/Unknown
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (3
years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Must State
Intention
Days
Days
Depends
Owneras to
Prior to
Prior
on # of
Company
Creeping Control Limitations
Cap
Loaned
ship
Group
Ownership
Ann’y of
to
Advance
(Max.
Shares
Blanket
ThresSize
Beyond
Proxy
AnnNotice
% of
Count as
Exclusion
hold
Limit
Mtg. Date
Date /
ual
Nominees
Board)
“Owned”
(3 years)
(1 Year
Filing /
Mtg.
For That
Unless
Release
Ann’y
Election
Noted)
* Denotes companies that adopted proxy access pursuant to a shareholder-approved bylaw.
+
Denotes one of 72 companies that received a shareholder proxy access proposal from the New York City Pension Funds for the 2016 proxy season.
1.
2.
3.
3M Company+
(11/10/15)
Abbott
Laboratories
(12/11/15)
AbbVie Inc.+
(2/18/16)
3%
3%
3%
20%
(≥2)
20%
(≥1)
25%
20
Yes if
recalled
20
Yes – silent
on recall
20
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
No
No
Yes
No
90 – 120
90 –
120
No
No
120 –
150
Any SH
nominates
any
nominee
Sidley Austin LLP
Page 28
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
4.
5.
6.
7.
Accenture plc*
(Ireland)
(2/3/16)
Adobe Systems
Incorporated
(8/31/16)
The AES
Corporation+
(11/25/15)
Aflac
Incorporated
(11/10/15)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥2)
20%
20%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(3 BDs)
and agrees
to recall
upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
Yes
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
• 25% (2
nominees count vs. cap (3
years)
years)
• Nom’g SH
• Nominees pursuant to
may not
agreement count vs. cap (3
nominate
years)
if nominee
received
• Proxy access unavailable if
<10%
successful advance notice
support (2
nominee remains in office (3
years)
years)
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted after
shareholder proposal
passed in 2015 and
competing proposal
failed; adopted and
shareholder proposal
was withdrawn
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Other/Unknown
120 –
150
No
No
120 –
150
Other/Unknown
None
Other/Unknown
Sidley Austin LLP
Page 29
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
8.
9.
Alaska Air
Group, Inc.
(12/9/15)
Alexion
Pharmaceuticals
, Inc.+
(1/8/16)
10. Allegheny
Technologies
Incorporated
(8/4/16)
11. Alliance Data
Systems
Corporation+
(1/26/16)
Ownership
Threshold
(3 years)
3%
Cap
(Max.
% of
Board)
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
and agrees
to recall
upon
notice
20
Yes if
revocable
at any
time
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(3 BDs)
and has
recalled as
of date of
nom.
notice or
agrees to
promptly
recall upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
No
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Any SH
nominates
any
nominee
Reduces
board cap
No
90 – 120
No
120 –
150
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
No
Depends
on # of
Advance
Notice
Nominees
For That
Election
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
None
25%
(2 years)
Adopted and
shareholder proposal
was excluded
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Adopted and
shareholder proposal
was withdrawn
25%
(2 years)
Other/Unknown
20%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
Creeping Control Limitations
• Successful proxy access
nominees count vs. cap (3
years)
None
Sidley Austin LLP
Page 30
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
12. Allison
Transmission
Holdings, Inc.
(3/11/16)
13. The Allstate
Corporation
(11/19/15)
14. Altria Group, Inc.
(10/28/15)
15. Amazon.com,
Inc. (2/24/16)
16. Ameren
Corporation+
(12/11/15)
Ownership
Threshold
(3 years)
3%
Cap
(Max.
% of
Board)
25%
(≥2)
3%
20%
3%
20%
(≥2)
3%
20%
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(3 BDs)
20
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Yes if
recallable
(3 BDs)
and agrees
to recall
upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
No
Yes
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
20%
(2 years)
Other/Unknown
No
120 –
150
Any SH
nominates
any
nominee
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
10%
(2 years)
Other/Unknown
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Other/Unknown
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
25%
(2 years)
Adopted and
shareholder proposal
was excluded
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Sidley Austin LLP
Page 31
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
17. American
Airlines Group
Inc.+ (3/9/16)
18. American
Electric Power
Company, Inc.
(10/20/15)
19. American
International
Group, Inc.
(11/16/15)
20. American Tower
Corporation+
(2/12/16)
21. AmerisourceBer
gen Corporation
(11/12/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
3%
25%
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs) and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(3 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (3
years)
• Nominees pursuant to
agreement count vs. cap (3
years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
No
120 –
150
Any SH
nominates
any
nominee
No
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted after
majority-supported
shareholder proposal
in 2015
Yes
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Other/Unknown
Yes
No, OK if
disclosed
but must
agree not to
accept an
increase in
comp. if
elected as
director
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Successful nominating
shareholder may not
nominate (3 years)
20%
(2 years)
Adopted and
shareholder proposal
was withdrawn
No
120 –
150
Any SH
nominates
any
nominee
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Yes
No
None
Sidley Austin LLP
Page 32
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
22. Amgen Inc.+
(2/15/16)
23. Amphenol
Corporation
(3/21/16)
Ownership
Threshold
(3 years)
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and
recalled by
record
date
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Creeping Control Limitations
Circumstances
of Adoption
20%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Any SH
nominates
any
nominee
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years)
25%
(2 years)
Other/Unknown
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
• Successful proxy access
nominees count vs. cap (3
years)
None
Adopted and
shareholder proposal
was excluded
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
Yes if
recallable
20
Yes if
recallable
(5 BDs) and
recalled
within 5
BDs of
notice
Yes
No
120 –
150
24. Anadarko
Petroleum
Corporation
(9/15/15)
3%
20%
(≥2)
25. Anthem, Inc.
(2/19/16)
3%
20%
(≥2)
20
Yes if
recallable
No
No
90 – 150
3%
25%
20
Yes if
recallable
(5 BDs)
No
No
120 –
150
26. Apache
Corporation
(2/3/16)
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
120 –
150
Yes (fees for
service
prohibited)
20
No
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Any SH
nominates
any
nominee
None
Sidley Austin LLP
Page 33
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
27. Apartment
Investment and
Management
Company+
(1/26/16)
28. Apple Inc.
(12/21/15)
29. Applied
Materials, Inc.
(12/8/15)
30. Arch Coal, Inc.
(2/26/15)
Ownership
Threshold
(3 years)
3%
Cap
(Max.
% of
Board)
20%
(≥2)
3%
20%
3%
20%
(≥2)
5%
20%
Group
Size
Limit
20
20
20
20
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Yes if
recallable
(5 BDs)
and agrees
to recall
upon
notice
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
No
Yes
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
120 –
150
No
120 –
150
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
such proxy
access
nominee
Circumstances
of Adoption
10%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.)
25%
(2 years)
Adopted after
shareholder proposal
failed at 2015 annual
meeting; another
shareholder proposal
failed at 2016 annual
meeting
• Successful proxy access
nominees count vs. cap (2
years)
20%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Creeping Control Limitations
• Successful proxy access
nominees count vs. cap (3
years)
• Nominees pursuant to
agreement count vs. cap
Any SH
nominates
any
nominee
No
No
Depends
on # of
Advance
Notice
Nominees
For That
Election
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Reduces
board cap
None
Sidley Austin LLP
Page 34
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
31. Archer-DanielsMidland
Company
(11/5/15)
32. Ashford
Hospitality
Prime, Inc.
(8/3/16)
33. AT&T Inc.
(12/18/15)
34. Automatic Data
Processing Inc.
(8/2/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
20%
(≥2)
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
No
20
Yes if
recallable
(3 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
and will
recall by
meeting
date
20
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
No
90 – 120
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
No
Sidley Austin LLP
Page 35
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
35. AvalonBay
Communities,
Inc.
(11/12/15)
36. Avista
Corporation
(8/17/16)
Ownership
Threshold
(3 years)
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
No
150
37. Avon Products,
Inc.+ (3/1/16)
3%
20%
(≥2)
20
Yes if
recallable
(5 BDs)
No
No
120 –
150
38. Bank of America
Corporation
(3/17/15)
3%
20%
20
Yes if
recallable
(3 days)
Yes
No
120 –
150
20
Yes if
recallable
(3 BDs)
and
recalled by
meeting
date
No
120 –
150
39. The Bank of New
York Mellon
Corporation
(10/13/15)
3%
20%
(≥2)
No
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted after
majority-supported
shareholder proposal
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Other/Unknown
20%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
20%
(2 years)
Adopted and
shareholder proposal
was withdrawn
None
Other/Unknown
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Nominating
SH
nominates
any
nominee
None
Reduces
board cap
Any SH
nominates
any
nominee
• Successful nominating
shareholder may not
nominate (2 years)
• Successful proxy access
nominees count vs. cap (2
years)
Sidley Austin LLP
Page 36
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
40. Barnes Group
Inc. (7/28/16)
41. Baxter
International
Inc.
(12/18/15)
42. Big Lots, Inc.*
(4/14/15)
43. Biogen Inc.
(3/27/15)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
20%
(≥2)
25%
25%
(≥1)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(3 BDs)
and agrees
to recall
upon
notice
None
20
No
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
Yes
No
120 –
150
No
Yes
(candidacy
fees and
fees for
service
prohibited)
120 –
150
Yes
Yes (fees for
service
prohibited)
120 –
150
Proxy Access
Unavailable if Advance
Notice Nomination
Days
Prior
to
Annual
Mtg.
Ann’y
Blanket
Exclusion
120 –
150
Any SH
nominates
any
nominee
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
None
Any SH
nominates
a proxy
access
nominee
• Successful proxy access
nominees count vs. cap (3
years)
None
Any SH
nominates
such proxy
access
nominee
Unavailable if
≥50% of
directors
up for
election
• Successful proxy access
nominees count vs. cap (3
years)
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
Other/Unknown
25%
(3 years)
Adopted and
shareholder proposal
was excluded
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2014
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Sidley Austin LLP
Page 37
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
44. BlackRock, Inc.*
(5/25/16 and
amended as of
7/20/16)
45. The Boeing
Company+
(12/14/15)
46. BorgWarner, Inc.
(2/10/16 and
amended as of
7/26/16)
47. Boston
Properties, Inc.
(2/24/15)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
25%
20%
(≥2)
20%
(≥2)
25%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
and
recalled by
record
date
25
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
5
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
Yes
No
No
Yes (fees for
service
prohibited)
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Any SH
nominates
any
nominee
120 –
150
Reduces
board cap
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
• Successful proxy access
nominees count vs. cap (3
years)
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
None
Adopted prior to vote
on shareholder
proposal (and
proposal passed)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
120
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap
(indefinitely)
Sidley Austin LLP
Page 38
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
25%
(≥2)
49. The Brink’s
Company
(3/19/16)
50. Bristol-Myers
Squibb Company
(2/12/16)
Company
48. Brandywine
Realty Trust
(5/24/16)
51. Broadridge
Financial
Solutions, Inc.
(7/2/15)
52. Brocade
Communications
Systems, Inc.
(1/26/16)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
25
Yes if
recallable
(5 BDs)
3%
20%
(≥2)
20
Yes if
recallable
(3 BDs)
No
No
120
3%
20%
(≥2)
20
Yes if
recallable
(5 BDs)
No
No
120 –
150
20
Yes if
recallable
(3 BDs)
No
Yes (fees for
service
prohibited)
30
Yes if
recallable
(5 BDs)
and
recalled by
record
date
3%
3%
25%
20%
(≥2)
No
No
No
No
Days
Prior
to
Annual
Mtg.
Ann’y
Blanket
Exclusion
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
Other/Unknown
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Reduces
board cap
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Other/Unknown
Unavailable if
≥30% of
directors
up for
election
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
None
Adopted and
shareholder proposal
was withdrawn
Depends
on # of
Advance
Notice
Nominees
For That
Election
Any SH
nominates
any
nominee
Any SH
nominates
any
nominee
120 –
150
120 –
150
45 – 75
Proxy Access
Unavailable if Advance
Notice Nomination
Any SH
nominates
any
nominee
Any SH
nominates
any
nominee
Creeping Control Limitations
None
None
Sidley Austin LLP
Page 39
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
53. Brunswick
Corporation
(5/4/16)
54. Cabot Oil & Gas
Corporation+
(3/11/15 and
amended as of
7/27/16)
55. Capital One
Financial
Corporation
(10/5/15)
56. Cardinal Health,
Inc. (6/30/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
No
20
Yes if
recallable
(3 BDs)
Yes
(through
term of
director’s
service)
20
Yes if
recallable
(5 BDs)
No
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• While board is classified,
number of proxy access
nominees may not >50% of
directors to be elected
• Successful proxy access
nominees count vs. cap (2
years)
• Directors in office or
nominees pursuant to
agreement count vs. cap
25%
(2 years)
Other/Unknown
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed); 2016
proposal also failed
25%
(2 years)
Adopted and
shareholder proposal
was excluded
None
Adopted and
shareholder proposal
was excluded
120 –
150
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
• Nominees pursuant to
agreement count vs. cap
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
120 –
150
None
Sidley Austin LLP
Page 40
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
57. CarMax, Inc.
(12/8/15)
58. Caterpillar Inc.+
(12/9/15)
59. CBL & Associates
Properties, Inc.
(2/11/16)
60. Celanese
Corporation
(2/8/16)
61. Cerner
Corporation+
(2/25/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
3%
20%
(≥2)
3%
25%
(≥2)
3%
20%
(≥2)
(≤1/3
at 2017
and
2018
annual
mtgs.)
3%
20%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
20
20
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
Yes if
recallable
(5 BDs) and
agrees to
promptly
recall upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Other/Unknown
None
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
None
Adopted after
majority-supported
proposal in 2015
No
120 –
150
No
No
120 –
150
Yes
No
120 –
150
• Successful proxy access
nominees count vs. cap (2
years)
120 –
150
Reduces
board cap
• Successful proxy access
nominees count vs. cap (3
years)
• Nominees pursuant to
agreement count vs. cap (3
years after board nom.) but
not <1
25%
(2 years)
Other/Unknown
120 –
150
Unavailable if
≥50% of
directors
then in
office
• Successful proxy access
nominees count vs. cap (3
years)
15%
(2 years)
Adopted and
shareholder proposal
was withdrawn
No
No
Yes
No
No
Reduces
board cap
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Any SH
nominates
any
nominee
Sidley Austin LLP
Page 41
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
62. CF Industries
Holdings, Inc.
(2/4/15 and
amended as of
10/14/15)
63. Chemed
Corporation
(2/19/16)
64. Cheniere Energy,
Inc.
(12/9/15 and
amended as of
9/15/16)
65. Chevron
Corporation
(9/30/15)
66. The Children’s
Place, Inc.
(2/12/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
25%
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(3 BDs)
20
20
20
Yes if
recallable
(5 BDs)
and agrees
to recall
upon
notice
Yes if
recallable
(3 BDs)
and
recalled
within 3
BDs of
notice
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
No
120 –
150
Any SH
nominates
any
nominee
No
120 –
150
Any SH
nominates
any
nominee
No
No
120 –
150
Any SH
nominates
any
nominee
No
Yes
(candidacy
fees OK but
fees for
service
prohibited)
120 –
150
Any SH
nominates
any
nominee
No
120 –
150
Any SH
nominates
any
nominee
Yes
No
No
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal passed)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
None
Adopted after
majority-supported
shareholder proposal
in 2015
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
25%
(2 years)
Other/Unknown
None
• Successful proxy access
nominees count vs. cap (2
years)
None
• Successful proxy access
nominees count vs. cap (2
years)
Sidley Austin LLP
Page 42
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
67. Cimarex Energy
Co. (11/11/15)
68. Cisco Systems,
Inc. (7/28/16)
69. CIT Group Inc.
(3/15/16)
70. Citigroup Inc.
(10/22/15)
71. The Clorox
Company
(8/28/15 and
amended as of
9/13/16)
Ownership
Threshold
(3 years)
3%
3%
Cap
(Max.
% of
Board)
25%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
Reduces
board cap
Creeping Control Limitations
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (3
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (3
years after board nom.) but
not <1
• Successful advance notice
nominees count vs. cap (2
years)
20%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Other/Unknown
None
Adopted after
majority-supported
shareholder proposal
in 2015
20%
(2 years)
Adopted and
shareholder proposal
was withdrawn
No
Yes (fees for
service
prohibited)
120 –
150
No
120 –
150
No
Depends
on # of
Advance
Notice
Nominees
For That
Election
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Adopted after
shareholder proposal
passed at 2015
annual meeting; has
requested no-action
relief to exclude 2016
shareholder proposal
No
No
Blanket
Exclusion
90 –
120
No
No
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
120 –
150
Reduces
board cap
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
Sidley Austin LLP
Page 43
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
72. Cloud Peak
Energy Inc.
(10/20/15 and
amended as of
5/2/16)
73. CMS Energy
Corporation+
(2/4/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
25%
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
None
Yes if
recallable
(3 BDs) and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
No
120 –
150
Any SH
nominates
such proxy
access
nominee
No
120 –
150
Any SH
nominates
any
nominee
Any SH
nominates
any
nominee
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
None
• Successful proxy access
nominees count vs. cap (2
years)
74. The Coca-Cola
Company
(9/2/15)
3%
20%
(≥2)
20
Yes if
recallable
(3 BDs)
No
No
120 –
150
75. Cognizant
Technology
Solutions
Corporation
(1/28/16)
3%
25%
(≥2)
None
Yes if
recallable
(5 BDs)
No
No
120 –
150
• Nominees pursuant to
agreement count vs. cap
120 –
150
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
76. ColgatePalmolive
Company+
(1/14/16)
3%
20%
(≥2)
20
Yes if
recallable
(5 BDs)
Yes
No
None
Reduces
board cap
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
None
Adopted after
shareholder proposal
passed in 2015 and
competing proposal
failed
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
25%
(2 years)
Adopted after
shareholder proposal
failed at 2015 annual
meeting; adopted and
shareholder proposal
was withdrawn
None
Adopted and
shareholder proposal
was excluded
10%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Sidley Austin LLP
Page 44
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
77. ConocoPhillips
(10/9/15)
78. Corning
Incorporated
(12/7/15)
79. Corrections
Corporation of
America
(1/8/16)
Ownership
Threshold
(3 years)
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥2)
25%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and agrees
to recall
upon
notice
20
Yes if
revocable
at any
time
20
Yes if
recallable
(3 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Yes (fees for
service
prohibited)
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
120 –
150
Reduces
board cap
60 –
90
Nominating
SH
nominates
any
nominee or
any SH
nominates
a proxy
access
nominee
Circumstances
of Adoption
None
Adopted after
majority-supported
shareholder proposal
in 2015
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
10%
(2 years)
Other/Unknown
None
20%
(1 year)
Other/Unknown
Creeping Control Limitations
• Successful proxy access
nominees count vs. cap (3
years)
• Nominees pursuant to
agreement count vs. cap
Any SH
nominates
any
nominee
120 –
150
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Sidley Austin LLP
Page 45
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
80. Crown Holdings,
Inc. (1/29/16)
81. CSX Corporation
(10/7/15)
82. CVS Health
Corporation
(1/21/16)
83. Dana Holding
Corporation
(1/26/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
(≥2)
3%
3%
20%
(≥2)
25%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
No
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs)
and
recalled
promptly
upon
notice
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
No
Yes
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
10%
(2 years)
Other/Unknown
120
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
• Successful advance notice
nominees count vs. cap (2
years) but not <1
25%
(2 years)
Other/Unknown
• Successful proxy access
nominees count vs. cap (3
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
120 –
150
120 –
150
Any SH
nominates
any
nominee
Sidley Austin LLP
Page 46
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
84. DaVita Inc.*
(6/20/16)
85. DCT Industrial
Trust Inc.
(5/4/16)
86. Deere &
Company
(8/31/16)
87. Devon Energy
Corporation+
(1/26/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
20%
(≥2)
20%
(≥2)
Group
Size
Limit
20
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(5 BDs)
20
No
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
and agrees
to recall
upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
Yes (fees for
candidacy
and service
prohibited)
Yes
Yes (fees for
service
prohibited)
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
120 –
150
Any SH
nominates
any
nominee
None
None
Adopted after
management
proposal passed in
2016; shareholder
proposal failed in
2015
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access or
advance notice nominees
being nominated for reelection by the board count
vs. cap
25%
(2 years)
Other/Unknown
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2016
None
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
120 –
150
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years)
Sidley Austin LLP
Page 47
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
88. Dominion
Resources, Inc.+
(12/17/15)
89. Domtar
Corporation
(2/23/16)
90. Dover
Corporation
(2/11/16)
91. DTE Energy
Company
(9/17/15)
Ownership
Threshold
(3 years)
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and agrees
to recall
upon
notice
20
Yes if
recallable
(3 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
Yes
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
such proxy
access
nominee
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Other/Unknown
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted after
majority-supported
shareholder proposal
in 2015
No
No
120 –
150
Sidley Austin LLP
Page 48
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
92. Duke Energy
Corporation+
(1/4/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
Group
Size
Limit
3%
20%
(≥2)
93. The Dun &
Bradstreet
Corporation
(12/3/15)
3%
20%
(≥2)
20
94. Eastman
Chemical
Company
(2/18/16)
3%
20%
(≥1)
20
95. eBay Inc.+
(3/15/16)
3%
20%
(≥2)
20
20
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Yes if
recallable
(3 BDs)
and
recalled
within 3
BDs of
notice
Yes if
recallable
(5 days)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
No
120 –
150
Any SH
nominates
any
nominee
No
No
120 –
150
Any SH
nominates
any
nominee
No
No
120 –
150
No
No
No
90 – 120
Depends
on # of
Advance
Notice
Nominees
For That
Election
Reduces
board cap
Any SH
nominates
any
nominee
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted and
shareholder proposal
was excluded
25%
(2 years)
Adopted and
shareholder proposal
was excluded
None
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
None
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
Sidley Austin LLP
Page 49
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
96. Ecolab Inc.
(12/3/15)
97. Edison
International
(12/10/15)
98. Edwards
Lifesciences
Corporation
(2/25/16)
99. Electronic Arts
Inc.+ (5/13/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
(≥2)
3%
3%
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
30
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
No
120 –
180
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Other/Unknown
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Directors in office or
nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
No
No
120 –
150
Sidley Austin LLP
Page 50
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
100. EOG Resources
Inc.
(9/22/15)
101. EQT Corporation
(10/14/15)
102. Equinix, Inc.
(3/28/16)
103. Equity
Residential
(10/1/15)
104. Exelon
Corporation+
(4/26/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
3%
20%
20
Yes if
recallable
(3 BDs)
No
3%
20%
(≥2)
3%
20%
(≥2)
3%
3%
20%
20%
(≥2)
20
Yes if
recallable
at any
time
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(3 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
and agree
to recall by
record
date
No
Yes
No
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
90 – 120
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years)
10%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Adopted after
majority-supported
shareholder proposal
in 2015
25%
(2 years)
Adopted and
shareholder proposal
was excluded
None
Adopted after
majority-supported
shareholder proposal
in 2015
25%
(2 years)
Adopted after
management
proposal passed in
2015 and competing
shareholder proposal
failed; adopted and
shareholder proposal
was withdrawn
Depends
on # of
Advance
Notice
Nominees
For That
Election
No
120 –
150
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
No
120 –
150
Any SH
nominates
any
nominee
• Successful nominating
shareholder may not
nominate (2 years)
Sidley Austin LLP
Page 51
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
105. Expeditors
International of
Washington,
Inc.* (5/3/16)
106. Express Scripts
Holding
Company+
(3/9/16)
107. FedEx
Corporation
(3/7/16)
108. Fidelity National
Financial, Inc.+
(2/3/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
20%
(≥2)
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 days)
20
Yes if
recallable
(5 BDs)
and
promptly
recalled
upon
notice
20
Yes if
recallable
(5 BDs)
25
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Creeping Control Limitations
• Successful proxy access
nominees count vs. cap (3
years)
• Successful nominating
shareholder may not
nominate (2 years)
Any SH
nominates
any
nominee
•
Reduces
board cap
but not <1 •
120 –
150
120 –
150
120
Depends
on # of
Advance
Notice
Nominees
For That
Election
Reduces
board cap
Nominating
SH
nominates
any
nominee
Successful proxy access
nominees count vs. cap (2
years)
Nominees pursuant to
agreement count vs. cap
• Successful proxy access
nominees count vs. cap (1
year)
• Successful proxy access
nominees count vs. cap (2
years)
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
None
Adopted after
management
proposal passed in
2015 and competing
shareholder proposal
failed; 2016
management
proposal also passed
20%
(2 years)
Adopted and
shareholder proposal
was withdrawn
None
Adopted after
majority-supported
shareholder proposal
in 2015; 2016
shareholder proposal
was excluded
None
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
Sidley Austin LLP
Page 52
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
109. FirstMerit
Corporation*
(4/15/15)
110. Fiserv, Inc.
(2/19/16)
111. Flowserve
Corporation
(12/14/15 and
amended as of
8/11/16)
112. Fluor
Corporation
(2/4/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
20%
(≥2)
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
No
20
Yes if
recallable
(5 BDs)
and
recalled
upon of
notice
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs) and
recalled
within 5
BDs of
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
Yes
Yes
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Yes (fees for
service
prohibited)
Yes (fees for
service
prohibited)
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
Days
Prior
to
Annual
Mtg.
Ann’y
Blanket
Exclusion
90
Any SH
nominates
a proxy
access
nominee
• Successful nominating
shareholder may not
nominate if >20% of board
consists of candidates
previously submitted by it or
its affiliates
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
120 –
150
Any SH
nominates
a proxy
access
nominee
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
120 –
150
Any SH
nominates
any
nominee
25%
(2 years)
Adopted and
shareholder proposal
was excluded
No
No
Proxy Access
Unavailable if Advance
Notice Nomination
Unavailable if
≥50% of
directors
up for
election
None
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
Sidley Austin LLP
Page 53
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
113. Freeport
McMoRan Inc.*+
(6/8/16)
114. General
Dynamics
Corporation
(12/2/15)
115. General Electric
Company
(2/6/15)
116. General Mills,
Inc. (3/8/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
20%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(3 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
Yes
Yes
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
15%
(2 years)
Adopted and
shareholder proposal
was withdrawn
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
No
120 –
150
Any SH
nominates
any
nominee
None
25%
(2 years)
Adopted and
shareholder proposal
was excluded
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Other/Unknown
No
120 –
150
Sidley Austin LLP
Page 54
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
117. General Motors
Company
(3/4/16)
118. Gilead Sciences,
Inc.
(12/23/15)
119. The Goldman
Sachs Group,
Inc.
(10/23/15)
120. H&R Block, Inc.
(7/14/15)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥2)
20%
(≥2)
20%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
and
recalled by
time the
nom.
notice is
submitted
20
Yes if
recallable
(5 BDs)
and agrees
to recall
within 5
BDs of
notice
15
Yes if
recallable
and agrees
to recall by
meeting
date
20
Yes if
recallable
(3 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
No
Yes
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Proxy Access
Unavailable if Advance
Notice Nomination
Creeping Control Limitations
Circumstances
of Adoption
Days
Prior
to
Annual
Mtg.
Ann’y
Blanket
Exclusion
120 –
180
Nominating
SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
No
120 –
150
Any SH
nominates
any
nominee
• Successful nominating
shareholder may not
nominate (2 years)
20%
(2 years)
Adopted after
shareholder proposal
failed at 2015 annual
meeting
25%
(1 year)
Adopted and 2015
shareholder proposal
was withdrawn; SEC
Staff denied no-action
relief for exclusion of
2016 shareholder
proposal seeking
amendments to proxy
access bylaw
No
No
90 –
120
Any SH
nominates
any
nominee
Depends
on # of
Advance
Notice
Nominees
For That
Election
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Reduces
board cap
None
Sidley Austin LLP
Page 55
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
121. Halliburton
Company
(9/14/16)
122. The Hartford
Financial
Services Group,
Inc. (7/21/16)
123. Hasbro, Inc.
(10/1/15 and
amended as of
12/10/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and gives
notice to
recall
within 3
BDs of
notice
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs)
25
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
+
124. HCP, Inc.
(2/8/15 and
amended as of
1/28/16)
125. Hess
Corporation
(11/4/15)
3%
20%
(≥2)
3%
20%
(≥2)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Yes
No
No
Yes (fees for
service
prohibited)
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
No
Creeping Control Limitations
Circumstances
of Adoption
Blanket
Exclusion
90 –
120
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
25%
(2 years)
Other/Unknown
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
None
Other/Unknown
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
10%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal passed);
adopted and
shareholder proposal
was withdrawn
None
Adopted after
majority-supported
shareholder proposal
in 2015
90 –
120
Depends
on # of
Advance
Notice
Nominees
For That
Election
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Days
Prior
to
Annual
Mtg.
Ann’y
120 –
150
No
Proxy Access
Unavailable if Advance
Notice Nomination
Nominating
SH
nominates
any
nominee
None
Any SH
nominates
any
nominee
120 –
150
90
• Successful proxy access
nominees count vs. cap (2
years)
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
Sidley Austin LLP
Page 56
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
126. Hewlett Packard
Enterprise
Company
(10/31/15)
127. The Home
Depot, Inc.+
(3/3/16)
128. Honeywell
International
Inc.+ (12/11/15
and amended as
of 2/12/16)
129. Huntington
Ingalls
Industries, Inc.
(1/28/16)
130. Illinois Tool
Works Inc.
(12/11/15)
Ownership
Threshold
(3 years)
3%
Cap
(Max.
% of
Board)
20%
3%
20%
(≥2)
3%
20%
(≥2)
3%
3%
25%
(≥2)
25%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
No
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
revocable
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
Proxy Access
Unavailable if Advance
Notice Nomination
Days
Prior
to
Annual
Mtg.
Ann’y
Blanket
Exclusion
120 –
150
Any SH
nominates
any
nominee
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
None
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
In connection with
spin-off from parent
company that had
adopted
• Successful proxy access
nominees count vs. cap (2
years)
• Directors in office and
nominees pursuant to
agreement count vs. cap
None
Adopted and
shareholder proposal
was withdrawn
No
120 –
150
Any SH
nominates
any
nominee
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
None
Adopted and
shareholder proposal
was excluded
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Adopted and
shareholder proposal
was excluded
No
No
90 –
120
Reduces
board cap
Sidley Austin LLP
Page 57
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
131. Ingersoll-Rand
plc* (6/2/16)
132. Intel
Corporation+
(1/21/16)
133. Intercontinental
Exchange, Inc.+
(5/6/16)
Ownership
Threshold
(3 years)
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥2)
20%
(≥2)
Group
Size
Limit
20
20
20
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(3 BDs)
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
date of
nom.
notice
Yes if
recallable
(5 BDs)
and
recalled by
record
date
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Any SH
nominates
any
nominee
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
• Successful proxy access
nominees count vs. cap (2
years)
• Successful advance notice
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years)
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (1
year)
• Successful nominating
shareholder may not
nominate (2 years)
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• 25% (2
years)
(also
applies to
advance
notice
nominees)
• Nom’g SH
may not
nominate
if nominee
received
<10%
support (2
years)
Other/Unknown
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
20%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Sidley Austin LLP
Page 58
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
134. International
Flavors &
Fragrances Inc.
(12/15/15)
135. International
Paper Company
(2/9/16)
136. Intuit Inc.
(5/5/16)
137. iRobot
Corporation
(3/7/16)
138. ITT Corporation
(2/19/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
3%
20%
(≥2)
3%
3%
3%
20%
(≥2)
25%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and
recalled
upon
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
None
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(3 BDs) and
recalled
within 3
BDs of date
of nom.
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
No
No
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
Circumstances
of Adoption
90 –
120
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
105 –
135
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Directors in office or
nominees pursuant to
agreement count vs. cap
25%
(2 years)
Other/Unknown
None
Adopted and
shareholder proposal
was withdrawn
None
Adopted and
shareholder proposal
was excluded
No
No
Creeping Control Limitations
Blanket
Exclusion
90 –
120
120 –
150
Depends
on # of
Advance
Notice
Nominees
For That
Election
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Days
Prior
to
Annual
Mtg.
Ann’y
No
No
Proxy Access
Unavailable if Advance
Notice Nomination
Any SH
nominates
any
nominee
Nominating
SH
nominates
any
nominee
None
Reduces
board cap
• Successful proxy access
nominees count vs. cap (3
years)
Sidley Austin LLP
Page 59
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
139. J.C. Penney
Company, Inc.
(7/20/16)
140. Johnson &
Johnson+
(1/26/16)
141. JPMorgan Chase
& Co. (1/19/16)
142. Kansas City
Southern
(2/26/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
(≥2 if
board
size
<10)
3%
3%
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
and
recalled by
record
date and
meeting
date
20
Yes if
recallable
(5 days)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Other/Unknown
No
No
120 –
150
Any SH
nominates
any
nominee
No
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
20%
(2 years)
Adopted and
shareholder proposal
was withdrawn
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
20%
(2 years)
Other/Unknown
None
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Yes
No
No
120 –
150
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
Sidley Austin LLP
Page 60
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
143. Kate Spade &
Company*
(5/19/16)
144. Kellogg
Company
(2/19/16)
145. Kimberly-Clark
Corporation
(12/14/15)
146. Kindred
Healthcare, Inc.
(10/29/15)
147. Knight
Transportation,
Inc.* (5/12/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
and
recalled
upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
20
Yes if
recallable
(5 BDs)
20%
(≥2)
20
Yes if
recallable
and
recalled by
notice
deadline
No
No
20%
(≥2)
20 (25
if mkt.
cap >
$2.5B)
Yes if
recallable
and
recalled
upon
notice
No
No
20%
(≥2)
20%
(≥2)
20
Yes if
recallable
No
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
120 –
150
120 –
150
75 –
100
120 –
150
120 –
150
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
Reduces
board cap
• Successful advance notice
nominees count vs. cap
• Nominees pursuant to
agreement count vs. cap
None
Adopted after
management
proposal passed and
competing
shareholder proposal
failed
Reduces
board cap
• Successful proxy access
nominees count vs. cap (3
years)
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Other/Unknown
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Adopted and
shareholder proposal
was withdrawn
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted and
shareholder proposal
was withdrawn
25%
(2 years)
Adopted after
management
proposal passed and
competing
shareholder proposal
failed
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
• Successful proxy access
nominees count vs. cap (2
years)
Sidley Austin LLP
Page 61
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
148. Kohl’s
Corporation
(11/11/15)
149. Leidos Holdings,
Inc. (4/12/16)
150. Level 3
Communications
, Inc. (11/12/15)
151. Lowe’s
Companies, Inc.
(3/18/16)
152. The Macerich
Company+
(4/21/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥1)
3%
3%
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
20
No
20
Yes if
recallable
(3 BDs)
and
recalled by
time the
nom.
notice is
submitted
20
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
No
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
120 –
150
No
120 –
150
No
120 –
150
No
No
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted after
shareholder proposal
failed at 2015 annual
meeting
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Blanket
Exclusion
Any SH
nominates
any
nominee
Any SH
nominates
any
nominee
Any SH
nominates
such proxy
access
nominee
120 –
150
60 –
90
Depends
on # of
Advance
Notice
Nominees
For That
Election
Sidley Austin LLP
Page 62
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
153. Macy’s, Inc.
(2/26/16)
154. Marathon Oil
Corporation
(4/9/15 and
amended as of
9/1/15)
155. Marathon
Petroleum
Corporation
(2/24/16)
156. McDonald’s
Corporation
(10/26/15)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
25%
20%
(≥2)
20%
(≥2)
Group
Size
Limit
20
20
20
20
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(3 BDs)
No
Yes if
recallable
at any
time
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Yes (fees for
service
prohibited)
Yes (fees for
service
prohibited)
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
120 –
150
Any SH
nominates
any
nominee
90 – 120
Any SH
nominates
such proxy
access
nominee
120 –
150
90 –
120
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Other/Unknown
Unavailable if
≥50% of
directors
up for
election
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal passed)
Reduces
board cap
• Successful proxy access
nominees count vs. cap (3
years)
• Successful advance notice
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (3
years after board nom.) but
not <1
None
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Adopted after
majority-supported
shareholder proposal
in 2015
Depends
on # of
Advance
Notice
Nominees
For That
Election
Sidley Austin LLP
Page 63
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
No
No
Yes
Yes (fees for
service
prohibited)
157. McKesson
Corporation*
(7/29/15)
3%
20%
20
Yes if
recallable
(3 BDs)
158. Merck & Co.,
Inc.
(7/22/15)
3%
20%
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(3 BDs)
and
recalled
within 3
BDs of
notice
159. MetLife, Inc.
(12/8/15)
160. MGC Diagnostics
Corporation
(2/2/16)
161. MGM Resorts
International
(1/13/16)
162. Microsoft
Corporation
(8/7/15 and
amended as of
9/20/16)
3%
20%
(≥2)
3%
20%
3%
20%
(≥2)
3%
20%
(≥2)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
None
No
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5BDs)
Yes
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
120 –
150
No
No
No
No
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Any SH
nominates
any
nominee
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
120 –
150
Nominating
SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Other/Unknown
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Other/Unknown
None
None
Other/Unknown
None
25%
(2 years)
Other/Unknown
15%
(2 years)
Adopted and 2015
shareholder proposal
was withdrawn; has
requested no-action
relief to exclude 2016
shareholder proposal
Creeping Control Limitations
None
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years)
Sidley Austin LLP
Page 64
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
163. Mondelēz
International,
Inc.
(10/1/15)
164. Monsanto
Company
(6/5/15 and
amended as of
1/11/16)
165. Monster
Worldwide, Inc.
(3/16/16)
166. Morgan Stanley
(10/29/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
3%
3%
20%
25%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
20
Yes if
revocable
at any
time
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
Yes if
recallable
(3 BDs)
and agrees
to
promptly
recall upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
120
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
such proxy
access
nominee
45 – 75
Any SH
nominates
any
nominee
120 –
150
Nominating
SH
nominates
any
nominee
Depends
on # of
Advance
Notice
Nominees
For That
Election
Unavailable if
≥50% of
directors
up for
election
Reduces
board cap
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
None
Adopted after
majority-supported
shareholder proposal
in 2015
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Other/Unknown
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
None
Sidley Austin LLP
Page 65
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
167. The Mosaic
Company
(3/3/16)
168. Murphy Oil
Corporation+
(2/3/16)
169. National Fuel
Gas Company
(3/10/16)
170. NETGEAR, Inc.
(4/19/16)
Ownership
Threshold
(3 years)
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥2)
3%
20%
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
and
recalled by
date of
nom.
notice
50
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
Yes (fees for
service
prohibited)
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Blanket
Exclusion
120 –
150
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
Yes (fees for
service
prohibited)
No
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
120 –
150
120 –
150
Depends
on # of
Advance
Notice
Nominees
For That
Election
Reduces
board cap
Any SH
nominates
any
nominee
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Other/Unknown
• Successful proxy access
nominees count vs. cap (2
years)
10%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.)
None
Other/Unknown
• Successful proxy access
nominees count vs. cap (2
years)
None
Other/Unknown
Sidley Austin LLP
Page 66
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
171. New York
Community
Bancorp, Inc. +
(3/17/15)
5%
20%
(≥1)
10
Yes – silent
as to recall
No
No
172. Newell Brands
Inc. (f/k/a
Newell
Rubbermaid
Inc.) (2/11/16)
3%
20%
(≥1)
20
Yes if
recallable
(3 BDs)
No
No
173. Newmont
Mining
Corporation
(2/12/16)
174. NiSource Inc.+
(1/29/16)
3%
20%
(≥2)
3%
20%
(≥2)
20
Yes if
recallable
(5 days)
20
Yes (if
recallable
and
recalled)
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
90 –
120
120 –
150
No
120 –
150
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Adopted prior to vote
on 2015 shareholder
proposal (and
proposal failed); 2016
shareholder proposal
passed
Reduces
board cap
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.)
None
Other/Unknown
• Nominees pursuant to
agreement count vs. cap
None
Adopted and
shareholder proposal
was withdrawn
Depends
on # of
Advance
Notice
Nominees
For That
Election
Any SH
nominates
any
nominee
120 –
150
No
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Any SH
nominates
any
nominee
Creeping Control Limitations
Sidley Austin LLP
Page 67
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
175. Noble Energy,
Inc. +
(10/20/15 and
amended as of
7/27/16)
176. Northrop
Grumman
Corporation
(12/4/15 and
amended as of
2/17/16)
177. NVR, Inc.
(11/6/15 and
amended as of
3/17/16)
178. Occidental
Petroleum
Corporation
(10/8/15)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
25%
(≥1)
20%
(≥2)
20%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
25
No
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Yes
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
any
nominee
No
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
any
nominee
Yes
Yes (fees for
service
prohibited)
Yes
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
None
• Successful proxy access
nominees count vs. cap (2
years)
None
• Successful proxy access or
advance notice nominees
count vs. cap (3 years)
• Nominees pursuant to
agreement count vs. cap
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
15%
(2 years)
Adopted after
shareholder proposal
failed at 2015 annual
meeting; 2016
shareholder proposal
also failed
None
Adopted and
shareholder proposal
was excluded
25%
(2 years)
Adopted after
shareholder proposal
failed at 2015 annual
meeting; amended
and 2016 shareholder
proposal was
excluded
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
Sidley Austin LLP
Page 68
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
179. Omnicom Group
Inc. (3/14/16)
180. Oracle
Corporation
(6/15/16)
181. Oshkosh
Corporation
(11/13/15 and
amended as of
9/13/16)
182. PayPal Holdings,
Inc.
(7/17/15)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥2)
20%
(≥2)
20%
Group
Size
Limit
20
20
20
15
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Yes if
recallable
(5 BDs)
and
recalled
upon
notice
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Any SH
nominates
any
nominee
120 –
150
Any SH
nominates
any
nominee
120 –
150
90 –
120
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted and
shareholder proposal
was excluded
None
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
2016 shareholder
proposal was
excluded
None
Adopted prior to vote
on shareholder
proposal (and
proposal failed); ; has
requested no-action
relief to exclude 2016
shareholder proposal
10%
(2 years)
Majority-approved
shareholder proposal
at prior parent
company annual
meeting
None
Any SH
nominates
any
nominee
120 –
150
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
• Successful proxy access
nominees count vs. cap (2
years)
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years) but not <1
• Nominees pursuant to
agreement count vs. cap
Sidley Austin LLP
Page 69
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Ownership
Threshold
(3 years)
Company
183. Peabody Energy
Corporation+
(12/10/15)
184. PepsiCo, Inc.+
(1/11/16)
185. PerkinElmer, Inc.
(7/27/16)
+
186. Pfizer Inc.
(12/14/15)
3%
Cap
(Max.
% of
Board)
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
20
20
20
20
Loaned
Shares
Count as
“Owned”
Yes if
revocable
at any
time
Yes if
recallable
(5 BDs)
and agrees
to recall
upon
notice
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
Yes
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
120 –
150
No
No
Blanket
Exclusion
90 –
120
No
No
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
120 –
150
Depends
on # of
Advance
Notice
Nominees
For That
Election
Reduces
board cap
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
10%
(2 years)
Adopted and
shareholder proposal
was withdrawn
None
Adopted and
shareholder proposal
was withdrawn
Any SH
nominates
any
nominee
• Successful nominating
shareholder may not
nominate (2 years)
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
Sidley Austin LLP
Page 70
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
187. PG&E
Corporation
(2/17/16)
188. Philip Morris
International
Inc.
(9/16/15)
189. Pioneer Natural
Resources
Company
(11/19/15 and
amended as of
5/19/16)
190. The PNC
Financial
Services Group,
Inc. (8/11/16)
191. PPG Industries,
Inc. (12/10/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
15
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
at any
time
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
None
Adopted and
shareholder proposal
was excluded
No
120 –
150
Any SH
nominates
any
nominee
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Other/Unknown
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access or
advance notice nominees
count vs. cap (2 years)
25%
(2 years)
Adopted after
shareholder proposal
failed at 2015 annual
meeting
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
None
Other/Unknown
• Successful proxy access
nominees count vs. cap (3
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (3
years after board nom.) but
not <1
• Successful advance notice
nominees count vs. cap (2
years)
None
Adopted and
shareholder proposal
was excluded
No
120 –
150
None
Reduces
board cap
Sidley Austin LLP
Page 71
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
192. PPL Corporation+
(12/18/15)
193. Praxair, Inc.+
(1/26/16)
194. The Priceline
Group Inc.
(3/18/15 and
amended as of
7/23/15 and
11/4/15)
195. The Procter &
Gamble
Company
(4/8/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
(≥2)
3%
3%
25%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
25
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
None
20
Yes if
recallable
(5 BDs)
Yes if
recallable
(3 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
Yes (no
timeframe
specified)
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
No
120 –
150
Any SH
nominates
any
nominee
No
120 –
150
Any SH
nominates
any
nominee
Yes (fees for
service
prohibited)
Yes (fees for
service
prohibited)
120 –
150
120 –
150
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
None
• Successful proxy access
nominees count vs. cap (2
years)
Nominating
SH
nominates
any
nominee or
any SH
nominates
such proxy
access
nominee
None
Reduces
board cap
None
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
None
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
None
Adopted and
shareholder proposal
was withdrawn
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal passed)
None
Shareholder proposal
was on 2015 ballot
but was not voted on
because proponent
failed to appear at
the meeting
Sidley Austin LLP
Page 72
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
196. The Progressive
Corporation
(8/7/15)
197. Prudential
Financial, Inc.
(3/10/15)
198. Public Service
Enterprise
Group
Incorporated
(12/15/15)
199. Qorvo, Inc.
(5/13/16)
200. QUALCOMM
Incorporated
(12/7/15 and
amended as of
7/11/16)
Ownership
Threshold
(3 years)
3%
3%
Cap
(Max.
% of
Board)
20%
(≥1)
20%
3%
25%
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
and
recalled
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs)
20
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Reduces
board cap
120
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.)
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Other/Unknown
Any SH
nominates
any
nominee
None
25%
(2 years)
Other/Unknown
No
120 –
150
Nominating
SH
nominates
any
nominee
None
None
Adopted and
shareholder proposal
was excluded
No
No
120 –
150
Any SH
nominates
any
nominee
25%
(2 years)
Other/Unknown
No
Yes (fees for
candidacy
and service
prohibited)
120 –
150
Any SH
nominates
any
nominee
None
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Yes
No
120 –
150
No
• Successful proxy access
nominees count vs. cap (2
years)
None
Sidley Austin LLP
Page 73
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
201. Quest
Diagnostics
Incorporated
(2/25/16)
202. Range Resources
Corporation
(2/29/16)
203. Raytheon
Company
(3/23/16)
204. Regency Centers
Corporation
(7/15/15 and
amended as of
4/21/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥2)
20%
(≥2)
25%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(10 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
120 –
150
Nominating
SH
nominates
any
nominee
No
120 –
150
Any SH
nominates
any
nominee
No
No
120 –
150
No
Yes (fees for
service
prohibited)
No
Yes
No
120
Depends
on # of
Advance
Notice
Nominees
For That
Election
None
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
Reduces
board cap
Any SH
nominates
any
nominee
Creeping Control Limitations
None
• Successful proxy access
nominees count vs. cap
(indefinitely)
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
Adopted and
shareholder proposal
was excluded
25%
(2 years)
Adopted after
majority-supported
proposal in 2015
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
25%
(2 years)
Other/Unknown
Sidley Austin LLP
Page 74
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
205. Reliance Steel &
Aluminum Co.
(2/16/16)
206. Republic
Services, Inc.
(5/6/16)
207. Rite Aid
Corporation
(4/15/15)
208. Rockwell
Automation, Inc.
(6/8/16)
209. Roper
Technologies,
Inc.+ (3/9/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
25%
(≥2)
3%
3%
3%
3%
25%
20%
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs)
and agrees
to recall
upon
notice
20
No
20
Yes if
revocable
at any
time
20
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
120 –
150
Any SH
nominates
any
nominee
No
Yes (fees for
service
prohibited)
No
Yes (fees for
action as a
director
prohibited)
120 –
150
Any SH
nominates
such proxy
access
nominee
No
120 –
150
Any SH
nominates
any
nominee
Yes
No
No
No
No
120 –
150
120 –
150
Any SH
nominates
any
nominee
Depends
on # of
Advance
Notice
Nominees
For That
Election
Reduces
board cap
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted after
majority-supported
proposal in 2015
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
10%
(2 years)
Other/Unknown
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015; adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (2
years)
Sidley Austin LLP
Page 75
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
210. Ryder System,
Inc. (2/22/16)
211. S&P Global Inc.
(f/k/a McGraw
Hill Financial,
Inc.) (1/27/16)
212. salesforce.com,
Inc.+ (3/21/16)
213. SBA
Communications
Corporation+
(7/28/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
20%
(≥2)
3%
5%
20%
(≥2)
20%
(≥1)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
25
Yes if
recallable
(5 days)
20
Yes if
recallable
(5 BDs)
20
10
Yes if
recallable
(5 BDs)
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
120 –
150
No
120 –
150
No
No
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Any SH
nominates
any
nominee
120 –
150
120
Depends
on # of
Advance
Notice
Nominees
For That
Election
Reduces
board cap
Any SH
nominates
any
nominee
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.)
None
Adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted and
shareholder proposal
was excluded
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
25%
(3 years)
Adopted after
management
proposal passed in
2015 and competing
shareholder proposal
failed; in 2016,
management
proposal failed and
competing
shareholder proposal
passed
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
• Successful proxy access
nominees count vs. cap (3
years)
• While board is classified,
number of proxy access
nominees may not >50% of
directors to be elected
Sidley Austin LLP
Page 76
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
214. Science
Applications
International
Corporation
(2/2/16)
215. Sempra Energy
(12/15/15)
216. SL Green Realty
Corp.+ (3/23/16)
217. SLM
Corporation*
(6/25/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
25%
(≥2)
3%
20%
(≥2)
3%
3%
20%
(≥2)
25%
(≥1)
Group
Size
Limit
20
20
20
20
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(3 BDs)
and
recalled by
date of
nom.
notice
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
No
Yes
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Other/Unknown
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
No
No
90 –
120
Any SH
nominates
such proxy
access
nominee
Reduces
board cap
Sidley Austin LLP
Page 77
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
218. Sonoco Products
Company
(2/10/16)
219. The Southern
Company*+
(5/25/16)
220. Southwestern
Energy Company
(11/9/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20% (≥1
if classified or
2 if not
classified)
3%
3%
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Any SH
nominates
any
nominee
120 –
150
120 –
150
Any SH
nominates
any
nominee
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Any SH
nominates
any
nominee • Successful proxy access
so that the
nominees count vs. cap (2
# of
years)
nominees • Directors in office or
would
nominees pursuant to
exceed the
agreement count vs. cap
# of dirs.
up for
election
20%
(2 years)
Adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (3
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
Depends
on # of
Advance
Notice
Nominees
For That
Election
Sidley Austin LLP
Page 78
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
221. Spectra Energy
Corp. (11/4/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
and agrees
to
promptly
recall upon
notice
3%
20%
3%
20% if
board
size
≥10 or
25% if
≤9 (≥1)
223. Staples, Inc.
(12/1/15)
3%
20%
(≥2)
25
224. Starbucks
Corporation
(9/13/16)
3%
20%
20
222. Splunk Inc.
(3/10/16)
20 (25
if ann.
revs.
>$4B)
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
No
Yes (fees for
service
prohibited)
Yes (no
timeframe
specified)
No
No
No
No
Yes (fees for
service
prohibited)
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Proxy Access
Unavailable if Advance
Notice Nomination
Circumstances
of Adoption
Days
Prior
to
Annual
Mtg.
Ann’y
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
90 –
120
Any SH
nominates
such proxy
access
nominee
Reduces
board cap
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Other/Unknown
Reduces
board cap
• Successful proxy access
nominees count vs. cap (3
years)
None
Adopted and
shareholder proposal
was withdrawn
15%
(2 years)
Adopted and
shareholder proposal
was withdrawn
25%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2016
120 –
150
90 –
120
120 –
150
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Any SH
nominates
any
nominee
Any SH
nominates
any
nominee
None
• Successful proxy access
nominees count vs. cap (2
years)
Sidley Austin LLP
Page 79
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
225. State Street
Corporation
(10/15/15)
226. Stericycle, Inc.
(2/10/16)
227. Sysco
Corporation
(8/26/16)
228. T. Rowe Price
Group, Inc.
(12/10/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
3%
20%
(≥2)
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(3 BDs)
and
recalled by
record
date
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
No
No
No
No
Yes (fees for
service
prohibited)
Days
Prior
to
Annual
Mtg.
Ann’y
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
120 –
150
Nominating
SH
nominates
any
nominee or
any SH
nominates
such proxy
access
nominee
Reduces
board cap
Any SH
nominates
any
nominee
120 –
150
90 –
130
120 –
150
Proxy Access
Unavailable if Advance
Notice Nomination
Any SH
nominates
any
nominee
Any SH
nominates
any
nominee
Creeping Control Limitations
None
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
• Successful proxy access
nominees count vs. cap (2
years)
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
Other/Unknown
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
20%
(2 years)
Other/Unknown
25%
(2 years)
Other/Unknown
Sidley Austin LLP
Page 80
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
229. Target
Corporation
(11/11/15)
230. TCF Financial
Corporation
(10/19/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
3%
25%
231. Teradata
Corporation
(7/26/16)
3%
20%
232. Time Warner
Inc. (1/28/16)
3%
20%
(≥2)
233. The Timken
Company*
(5/10/16)
234. U.S. Bancorp+
(1/19/16)
3%
20%
(≥2)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
20
No
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
Adopted and
shareholder proposal
was excluded
None
Adopted after
majority-supported
shareholder proposal
in 2015
No
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
Yes
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
25%
(2 years)
Other/Unknown
20
Yes if
recallable
(5 BDs)
No
No
120 –
150
20
Yes if
recallable
(5 BDs)
No
No
150 –
180
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
20
Yes if
recalled by
date of
nom.
notice
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Other/Unknown
20
Yes if
recallable
(5 BDs)
No
120 –
150
Any SH
nominates
any
nominee
None
Adopted and
shareholder proposal
was withdrawn
No
No
None
Sidley Austin LLP
Page 81
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
235. UDR, Inc.
(5/12/16)
236. Union Pacific
Corporation+
(11/19/15)
237. United
Continental
Holdings, Inc.
(2/18/16)
238. United Natural
Foods, Inc.
(10/23/15 and
amended as of
9/8/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
20%
(≥2)
20%
(≥2)
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
No
No
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
Yes (fees for
service
prohibited)
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
10%
(2 years)
Other/Unknown
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Adopted and
shareholder proposal
was excluded
• Successful proxy access
nominees count vs. cap (3
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (3
years after board nom.)
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
120 –
150
Any SH
nominates
such proxy
access
nominee
Reduces
board cap
and
unavailable if
≥50% of
directors
up for
election
Sidley Austin LLP
Page 82
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
239. United Rentals,
Inc. (9/8/16)
240. United
Technologies
Corporation
(9/9/15)
241. United
Therapeutics
Corporation
(4/29/15)
242. UnitedHealth
Group
Incorporated
(2/9/16)
Ownership
Threshold
(3 years)
3%
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
(≥1)
20%
(25% if
<10)
20%
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
revocable
at any
time
20
Yes if
recallable
(3 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(3 BDs)
and
recalled by
record
date
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
No
No
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
120 –
150
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Any SH
nominates
any
nominee
No
120 –
150
No
120 –
150
Any SH
nominates
any
nominee
120 –
150
Nominating
SH
nominates
any
nominee or
any SH
nominates
such proxy
access
nominee
Yes (fees for
service
prohibited)
Depends
on # of
Advance
Notice
Nominees
For That
Election
Reduces
board cap
Reduces
board cap
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (3
years)
25%
(3 years)
Other/Unknown
None
Other/Unknown
• Successful proxy access
nominees count vs. cap (if
mid-term and not up for
election)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Adopted and
shareholder proposal
was excluded
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
Sidley Austin LLP
Page 83
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
243. Unum Group+
(2/24/16)
244. VCA Inc.
(10/29/15)
245. VEREIT, Inc.
(8/5/15 with
1/1/16 effective
date)
246. VeriSign, Inc.
(7/27/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
5%
20%
(≥1)
3%
3%
25%
20%
(≥2)
Group
Size
Limit
20
20
20
20
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(5 BDs)
and
recalled by
date of
nom.
notice
Yes if
recallable
(3 BDs)
and
recalled by
date of
nom.
notice
Yes if
recallable
(5 BDs)
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
No
120 –
150
Any SH
nominates
any
nominee
Yes
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (3
years)
25%
(2 years)
Adopted after
shareholder proposal
failed at 2015 annual
meeting
No
Yes (fees for
service
prohibited)
120
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap
(indefinitely)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
None
Adopted after
shareholder proposal
failed at 2016 annual
meeting; company
had proposed terms
of its own proxy
access bylaw in 2016
proxy statement
Yes
No
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
Sidley Austin LLP
Page 84
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
247. Vertex
Pharmaceuticals
Incorporated+
(4/26/16)
248. Visa Inc.
(10/30/15)
249. Visteon
Corporation+
(6/10/16)
Ownership
Threshold
(3 years)
3%
3%
3%
Cap
(Max.
% of
Board)
20%
(≥2)
20%
20%
(25% if
<10)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
20
Yes if
recallable
(3 BDs)
and
recalled
within 3
BDs of
notice
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Yes
No
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees and directors in
office pursuant to
agreement count vs. cap (2
years after board nom.)
10%
(2 years)
Adopted after
majority-supported
shareholder proposal
in 2015
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Other/Unknown
120 –
150
Any SH
nominates
such proxy
access
nominee;
nominating
SH that
nominates
proxy
access
nominee
may not
also use
advance
notice
15%
(2 years)
Adopted after
shareholder proposal
passed in 2015 and
competing proposal
failed; adopted and
shareholder proposal
was withdrawn
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
No
No
No
Proxy Access
Unavailable if Advance
Notice Nomination
Days
Prior
to
Annual
Mtg.
Ann’y
90
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
• Successful proxy access
nominees count vs. cap
(indefinitely)
Sidley Austin LLP
Page 85
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
250. Walgreens Boots
Alliance, Inc.
(10/14/15)
251. The Walt Disney
Company
(6/28/16)
252. WD-40 Company
(7/13/16)
253. Wells Fargo &
Company+
(12/17/15)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
3%
20%
(≥2)
3%
20%
(≥2)
3%
3%
20%
20%
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
Prohibition
on ThirdParty
Compensation
Arrangements
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Any SH
nominates
any
nominee
120 –
150
120 –
150
Nominating
SH
nominates
any
nominee
No
No
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
Yes
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
any
nominee
20
Yes if
recallable
(5 BDs)
No
No
120 –
150
Any SH
nominates
any
nominee
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
25%
(2 years)
Adopted after
shareholder
proposals failed at
2015 and 2014 annual
meetings; has
requested no-action
relief to exclude 2016
shareholder proposal
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted after
shareholder proposal
failed in 2013 and
was withdrawn in
2014
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap
25%
(2 years)
Has requested noaction relief to
exclude 2016
shareholder proposal
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
None
Adopted and
shareholder proposal
was withdrawn
Creeping Control Limitations
None
Reduces
Board Cap
Sidley Austin LLP
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Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
254. The Wendy’s
Company*
(5/26/16)
Ownership
Threshold
(3 years)
3%
Cap
(Max.
% of
Board)
Group
Size
Limit
20%
(25% if
<10)
25
255. Westmoreland
Coal Company*
(5/18/16)
3%
25%
(≥2)
10 (25
if mkt.
cap
>$1B)
256. Whiting
Petroleum
Corporation
(2/18/16)
3%
25%
25
257. Whole Foods
Market, Inc.
(6/26/15)
3%
20%
(≥1)
20
Loaned
Shares
Count as
“Owned”
Yes if
recallable
(5 BDs)
and
recalled by
meeting
date
Yes if
recallable
(5 BDs)
and
recalled
within 5
BDs of
notice
Yes if
recallable
(5 BDs)
and
recalled
upon
notice
Yes if
recallable
(3 BDs)
and
recalled by
time the
nom.
notice is
submitted
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
No
Prohibition
on ThirdParty
Compensation
Arrangements
No
No
No
Yes
No
Yes
Yes (fees for
service
prohibited)
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Any SH
nominates
any
nominee
120 –
150
90 –
120
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.)
None
Adopted and
shareholder proposal
was excluded
25%
(2 years)
Adopted after
management
proposal passed in
2016; shareholder
proposal failed in
2015
None
120 –
150
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years)
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
120 –
150
Reduces
board cap
and
unavailable if
≥50% of
directors
up for
election
• Successful proxy access
nominees count vs. cap (3
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (3
years after board nom.)
• Successful nominating
shareholder may not
nominate (2 years)
25%
(2 years)
Adopted prior to vote
on shareholder
proposal (and
proposal failed)
Any SH
nominates
such proxy
access
nominee
Sidley Austin LLP
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Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
258. Windstream
Holdings, Inc.
(11/19/15)
259. Xcel Energy+
(2/17/16)
260. Xylem Inc.
(2/25/16)
261. Yahoo! Inc.
(3/25/16)
Ownership
Threshold
(3 years)
Cap
(Max.
% of
Board)
3%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
3%
20%
(≥2)
20
Yes if
recallable
(5 BDs)
3%
20%
(≥2)
20
Yes if
recallable
(5 BDs)
20
Yes if
recallable
(5 BDs)
and agrees
to
promptly
recall upon
notice
3%
20%
(≥2)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Prohibition
on ThirdParty
Compensation
Arrangements
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
Proxy Access
Unavailable if Advance
Notice Nomination
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Unavailable if
≥30% of
directors
up for
election
Creeping Control Limitations
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
• Successful proxy access
nominees count vs. cap (2
years)
None
Other/Unknown
Yes (fees for
service
prohibited)
120 –
150
Any SH
nominates
such proxy
access
nominee
No
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted and
shareholder proposal
was withdrawn
No
No
120 –
150
Any SH
nominates
any
nominee
• Successful proxy access
nominees count vs. cap (2
years)
None
Adopted and
shareholder proposal
was excluded
No
120 –
150
Any SH
nominates
any
nominee
25%
(2 years)
Adopted and
shareholder proposal
was withdrawn
No
No
None
Sidley Austin LLP
Page 88
Appendix – Select Terms of Proxy Access Provisions Adopted Since January 1, 2015
Other Ownership
Requirements
Key Parameters
Company
262. YUM! Brands
Inc.
(9/18/15)
263. Zoetis Inc.+
(2/19/16)
Ownership
Threshold
(3 years)
3%
3%
Cap
(Max.
% of
Board)
20%
20%
(≥2)
Group
Size
Limit
Loaned
Shares
Count as
“Owned”
20
Yes if
recallable
(3 BDs)
and
recalled by
date of
nom.
notice
20
Yes if
recallable
(5 BDs)
Must State
Intention
as to
Ownership
Beyond
Mtg. Date
(1 Year
Unless
Noted)
Yes
No
Prohibition
on ThirdParty
Compensation
Arrangements
Yes (fees for
service
prohibited)
No
Nomination
Deadline
(Annual Meeting)
Days
Prior to
Ann’y of
Proxy
Date /
Filing /
Release
Days
Prior
to
Annual
Mtg.
Ann’y
120 –
150
90 –
120
Proxy Access
Unavailable if Advance
Notice Nomination
Restrictions
on Renominating
Proxy Access
Nominees
Based on %
Support and
Other
Freeze-Outs
Circumstances
of Adoption
Adopted and
shareholder proposal
was withdrawn or
excluded
Adopted and
shareholder proposal
was withdrawn
Blanket
Exclusion
Depends
on # of
Advance
Notice
Nominees
For That
Election
Any SH
nominates
such proxy
access
nominee
Unavailable if
≥50% of
directors
up for
election
None
25%
(2 years)
Reduces
board cap
• Successful proxy access
nominees count vs. cap (2
years after board nom.)
• Nominees pursuant to
agreement count vs. cap (2
years after board nom.) but
not <1
None
Creeping Control Limitations
Note: Data in this Appendix is derived from publicly-available information as of September 22, 2016. Inclusion of a company in this Appendix is not meant to suggest that Sidley Austin LLP advised such
company regarding adopting proxy access.
Sidley Austin LLP
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