James Moloney/PHOTO: SEC
Thanks to a blockade thrown up by James Moloney, the former big corporation lawyer (for Gibson Dunn) who is now the director of the Division of Corporation Finance (“CorpFin”) at the Securities and Exchange Commission, “small” shareholders (those with less than $5 million in holdings in a company) can no longer utilize the agency’s electronic reporting distribution system (called “EDGAR”) to share their views with a company’s other investors.
In other words, the woke corporations now have their very own insider at their No. 1 regulator in the U.S., who now controls the machinery!
One of the first steps by Moloney, who was hired at the wishes of SEC Chairman Paul Atkins, was to muffle the pesky voices of lesser shareholders like NLPC. After all, he is “expected to align closely with [the] SEC chief’s deregulatory orientation, with a focus on ‘alleviating disclosure burdens’ and ‘tailoring smart, practical and effective regulations that will allow companies to thrive.’” There has been joy all around (with “exclamation!”) the corporate lawyer banter boards and collaboration channels, as the nuisances of scrutiny and accountability are barred from access to the automated, taxpayer-funded information distribution services controlled by CorpFin. We can hardly wait to see their plans for “shareholder proposal modernization.”
Thus we at NLPC (and other shareholder activists) must develop more of our own mechanisms to distribute our reports that explain our views about what shareholders vote on (like director candidates, executive pay, and shareholder proposals).
So here we are.
Earlier this week we circulated to investors at Disney our proxy memorandum asking for them to vote for Proposal 6, which asks for the board of directors to change voting rules so that shareholders can aggregate their votes in support of one or a few nominees, rather than limit their votes to a “yea” or “nay” vote for each nominee on the slate. As we explain in the report:
By implementing cumulative voting, owners can pool their votes in favor of one or more specific candidates they believe better represent their governance perspectives, with the hope that the monolithic slate chosen by the Board is less likely to be entrenched long-term. In the case of Disney, this structural reform addresses the persistent gap between what should be the benefits from Disney’s unique competitive advantages, and its disappointing financial performance in recent years. A board with less insularity and differing perspectives will be better equipped to provide necessary oversight, challenge management complacency, and curtail the progressive politics that have damaged Disney’s brand.
The report is far more than a dry argument for corporate governance logistical changes. We go into great detail about the multitude of financial and leadership failures of at least the last 6-7 years, under the direction of CEO Bob Iger and Disney’s clubby, elitist and politically leftist board of directors.
You can read the text of our shareholder proposal for Disney here, and the proxy report in support of the proposal is here. Disney’s proxy statement for its annual meeting, scheduled for March 18, can be found here.
