Apple adopts proxy access, lowers bar for shareholder nominations to board of directorsApple on Tuesday issued amended corporate bylaws that affords a shareholder, or group of shareholders, with sufficient standing the opportunity to nominate a representative to the company's board of directors, a mechanism referred to as "proxy access."
According to a Securities and Exchange Commission "http://investor.apple.com/secfiling.cfm?filingID=1193125-15-410853&CIK=320193">filing, Apple's newly adopted amendments implement proxy access to permit a shareholder, or a group of up to 20 shareholders, who own at least 3 percent of Apple shares for at least three years to nominate directors to the board.
As noted by The Wall Street Journal, the stipulation allows shareholders to nominate 20 percent of Apple's eight-person board, which translates to one director. The report goes on to say a proposal to enact proxy access brought forth at Apple's annual shareholder meeting in March gained support from 39 percent of shareholders.
The change bodes well for high-profile shareholders like activist investor Carl Icahn and hedge fund manager David Einhorn, who have in the past sought to sway Apple's board over share buyback and cash management policies. Both Icahn and Einhorn meet the proxy access time requirement, but fall well short in terms of share ownership.
While 3 percent ownership rule, which equates to a minimum stake of more than 167.4 million shares, precludes individual shareholders from nominating a director, it leaves the door open for coalitions or large funds like Vanguard Group, State Street and FMR, each of which own stakes of 3 percent or more. Further, Apple recognizes two or more funds under common management and investment control, funded primarily by the same employer, or a "group of investment companies," as one shareholder or beneficial owner, the filing reads.
Proxy access has become a valuable tool for investors seeking meaningful influence in company dealings. Apple joins other big-name corporations that have adopted proxy access amendments, including McDonald's and Coca-Cola.
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