Overview

Cleary Gottlieb reports that shareholder proposals advocating that corporations provide shareholders with the right to act by written consent in lieu of a meeting reappeared on ballots this proxy season after a hiatus of several years and have won average shareholder support of over 54%.

While these proposals are nonbinding and the number of companies with such proposals on the ballot in 2010 is relatively small – a total of 16 companies, according to RiskMetrics – the level of shareholder support is striking and will likely encourage proponents to advance proposals at more companies next year. Today, only approximately 28% of the Fortune 500 and 31% of public companies1 permit shareholders to act by less than unanimous written consent, but, over time, shareholder activism can change common practice. The recent marked decrease in companies with classified boards or shareholder rights plans and the increase in companies with majority-voting standards are notable examples. All public companies, whether or not they received a written consent proposal this proxy season, should understand the issues
involved and prepare for the possibility of future proposals.

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