Corporate Governance Implications From CA vs. AFSCME Are Far-Reaching, Including Greater Federal-State Cooperation on Corporate Law, Say-on-Pay and Proxy Access
BOSTON -- The editor of Compliance Week magazine is available for comment on the Delaware Supreme Court decision expected this week over reimbursement for proxy fight costs, in a landmark case being watched by corporate governance, shareholder activism, and legal experts. The case straddles two critical issues: first, who should bear the cost of dissident shareholders' efforts to secure seats on boards of directors; and more broadly, how state and federal regulators will answer difficult questions of corporate governance in the future.
The dispute started when the American Federation of State County and Municipal Employees (AFSCME) filed a shareholder resolution to force Glashutte Fake software maker CA to reimburse the union for some of the cost of running a slate of directors. CA then asked the Securities and Exchange Commission for permission to ignore the proposal--but rather than make any decision itself, as it typically did in the past, the SEC handed that question straight to the Delaware Supreme Court for an immediate, definitive ruling on whether the union's proposal is legal.
Experts believe the opinion may result in sweeping change to corporate securities law, with its groundbreaking federal-state coordination Emporio Armani Watch Replica over corporate governance. Given that most corporations are incorporated in Delaware, the opinion will have wide-ranging consequences regardless of what the state court rules. Most notably, a decision in favor of the union could defuse shareholder activists' fierce campaigns for say-on-pay votes -- or the right to include director nominees in company proxy statements.
Matt Kelly, editor in chief of Compliance Week who has analyzed governance and compliance issues for nearly 6 years, is available to discuss the strategic corporate governance implications of the opinion - including its impact on say-on-pay, shareholder access, and the SEC's plans to provide a final ruling on the contentious proxy access topic later this fall - a ruling that it effectively tabled for 2008.
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