April 18, 2012
A new HLS clinic, in its first year of operation, has already contributed to significant governance reforms in numerous S&P 500 companies.
The Harvard Law School Shareholder Rights Project (SRP) is a clinical program at Harvard Law School through which faculty and students assist public pension funds and charitable organizations to improve corporate governance at publicly traded companies in which they are shareowners. During the 2011-12 proxy season, the SRP has been representing and advising several institutional investors – the Illinois State Board of Investment, the Los Angeles County Employees Retirement Association, the Nathan Cummings Foundation, the North Carolina State Treasurer, and the Ohio Public Employees Retirement System – in connection with the submission of shareholder proposals to over eighty S&P 500 companies that have staggered boards. The proposals urge a move to annual elections, which are widely viewed as corporate governance best practice.
Through active engagement with companies receiving declassification proposals, the SRP and the institutional investors working with the SRP have been able to reach negotiated outcomes with forty-four companies receiving such proposals. These forty-four companies – representing over one-third of the S&P 500 companies that had staggered boards as of the beginning of this proxy season – have entered into agreements committing them to bring management proposals to declassify their boards. (A list of thirty-five companies that already disclosed management proposals made pursuant to such agreements is available here). The large-scale declassification of boards is expected to have a significant impact on governance in large publicly traded firms.
In companies where negotiated outcomes have not been obtained, precatory proposals to declassify the board will go to a vote at the 2012 annual meeting. (A list of thirty-six S&P 500 companies where proposals are expected to go to a vote is available here.) Thus far, only one of the proposals submitted by SRP-represented institutions went to a vote, and it won 77% of the votes cast.
The SRP’s director is Lucian Bebchuk. Its 2011-2012 advisory board includes Richard Breeden, Jesse Fried, Jeffrey Gordon, Reinier Kraakman, Michael McCauley, and Peter Mixon. Scott Hirst serves as the SRP’s Associate Director, and June Rhee serves as counsel.
Students interested in working at the SRP in the next academic year should contact its administrative director Emily Lewis.