SNAC Shareholders Committee
SNAC Shareholder Nomination to the AGM Committee resolutions are proposals submitted by shareholders for a vote at the company's next general shareholders meeting. Typically, these SNAC resolutions are opposed by the corporation's management, hence the insistence for a vote. For publicly held corporations in the United Kingdom, the submission and handling of resolutions is regulated by the PLC (with the London Stock Exchange).
History.
Shareholder Committees were started in about 1993 by the Swedish Private Shareholders Organisation in response to the 1992 Cadbury Report into Corporate Governance; a few small private shareholder members thought it would be a good idea to invite the Chairman to meet with the large shareholders and private investors to discuss the management and selection of the Board Directors. Initially the largest shareholders refused, allowing many keen smaller institutional investors to join. After press coverage of these big institutional pension funds refusing to attend a short meeting with the Chairman, despite having millions invested in the company, the big funds organised themselves to attend.
The UK Shareholders Association (UKSA) picked up the idea in the early days of their formation and together members campaigned to stop cheap share options being issued to Directors. The idea was then lost. “Shareholder Committees” faced strong opposition from the CEOs and Chairman but was liked by quieter Directors.
Cevian Capital senior partner Harlan Zimmerman and Tomorrow's Company Mark Goyder collaborated to produce a report that reintroduced the idea to the UK.
As an AGM resolution it requires no changes in the Company’s Articles of Association and a standard resolution format has been adopted in Sweden that sets out the voluntary selection process and operations. With sensible policies like only allowing a shareholder to chair the meeting, setting out when a member can formally leave the committee – which is if they no longer have any shares held in that company.
One of the Founding Directors of ShareSoc reinvigorated the old idea and the Board of ShareSoc produced a policy paper supporting the proposal in 2011.
Minister Vince Cable participated in a consultation and caused the forming of The Investors Forum [1] which had great success with Balfour Beatty PLC and several other engagements. However the proposal lacked a seat for the private investor that contributed so much in Sweden.
In 2012 a shareholder proposal was made to have the Board of RBS to adopt a Shareholder Committee which was refused by the Board and the Board Nomination committee.
In 2013 a Corporate Governance Conference was held in Parliament and Gavin Palmer won the competition for the Best Conference Paper with a proposal for establishing Shareholder Committees with a particular twist to allow for the attendance of the largest creditor to the PLC which was appropriate for RBS Group PLC.
Shareholders submit the resolution dealing primarily with corporate governance as a way to fairly and formally organise fellow beneficial shareholders to discuss the selection of Directors with the Chairman of the Board as a guide and member. New volunteer members are elected after being invited by the Chairman of the Board to join. Acceptance is voluntary and popular as the greater insight has been shown to improve the Pension Fund managers performance by 0.5% per year – a considerable improvement. An independent analyst attributed this to the Fund Manager proposed by the pension fund understanding the talent and plans of the management better and having greater confidence to invest on the dips, similar to Warren Buffett when the company embarks on a good investment that lowers performance in the short term.
Virtually all shareholder resolutions are non-binding (or "precatory," to use the legal term of art).[2] In this sense the voting on these resolutions more closely resembles a poll than it does a (binding) referendum or plebiscite. Still, media coverage of voting on shareholder resolutions tends to focus on whether the proposal received a majority of votes, which occurs in a very small but increasing proportion of cases.
Shareholder resolutions have been an important part of activist campaigns in several cases. For example, resolutions were effective at raising public awareness and thereby pressuring corporate management about investments in Shell Transport and Trading PLC about Green issues by the organisation Follow This, apartheid South Africa, nuclear power, and labor disputes. Given these results, resolutions have been spearheaded by several coordinating groups, including the AFL-CIO and the Interfaith Center on Corporate Responsibility. Governmental, Local Authority, Trade unions pension funds also have become involved in supporting and submitting shareholder resolutions.
In 2016 Chris Philp MP included Shareholder Committees in a proposal to parliament [3]
In 2017-18 growing calls from ShareSoc and Manifest Director Cliff Weight with Founding member Gavin Palmer were made to the Royal Bank of Scotland RBS by the 30th December 2016 and in December 2017; however despite the 163 signatories The RBS refused to put the resolution forward to the 2017 Annual General Meeting citing unspecified legal reasons.
2017 The Transparency Task Force Stability Group paper included Shareholder Committees in its recommendations to be adopted to Parliament.
In 2018 RBS staff agreed to accept receipt of a resolution for the AGM asking for a debate of the Shareholder Committee idea (A UK first) and a Special resolution to establish a Shareholder Committee.
References
- ↑ https://www.investorforum.org.uk
- ↑ Monks, Robert A. and Nell Minow. Corporate Governance. Blackwell Publishers, 2001.
- ↑ www.chrisphilp.com/blog.asp?BlogID=72
Bridging the UK engagement gap through Swedish-style nomination committees 2010 [1] "Activism advocate Myners to join Cevian". Financial Times.
Sources
- Swedish Shareholders Association Est 1966 Aktiespararna [2]
- ShareSoc.org. Est 2011 "Shareholder Committees Proposal" [3]
- UK Shareholder Association UKSA Est 1992 [4]
- AFL-CIO. "How to File a Shareholder Resolution" [5]
- Gartman, Grant A. The IRRC handbook on proxy voting duties and guideline development. 1999
- Gray, Hillel. New Directions in the Investment and Control of Pension Funds. DC: Investor Responsibility Research Center, 1983.
- Medical Committee for Human Rights v. SEC 432 F.2d 639 (DC Cir. 1970, cert. granted) 401 US 973 (1971)
- SEC Shareholder Proposals Staff Legal Bulletin No. 14B, September 15, 2004 [6]
- Shareholder Activism IRRC
- Simon, Powers and Gunnemann. The Ethical Investor Yale Univ. Press
- Voorhes, Meg. "The Rising Tide of Shareholder Activism" DC: IRRC, 2005
- High Pay Centre and Chris Philps MP 'Restoring Responsible Ownership' Sep 2016 [7]
- Shareholder Committee called for at RBS say Manifest Dec 2017 [8]
- RBS Shareholders call for a Shareholders Committee Independent newspaper Dec 2017 [9]
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