Some public companies have requested the SEC to permit exclusion of proxy access proposals by stating the shareholder proposal directly conflicts with the issuers own proposal that will be included in the proxy statement.  The practice began when Whole Foods was recently successful in obtaining SEC relief.

The Council of Institutional Investors, or CII, has now weighed in.

In a letter to Whole Foods, CII stated:

CII was deeply disappointed by Whole Foods’ initial move to thwart a shareholder’s non-binding proxy access proposal by countering with plans to propose an access bylaw amendment with an unworkable ownership threshold. The proposed threshold—requiring a nominating shareholder to have held a 9 percent stake for five years—would not have been viable for any current Whole Foods shareholder.

CII is not comforted by Whole Foods’ subsequent decision to instead ask shareholders to approve an access bylaw requiring a single nominating investor to have held a minimum of 5 percent of the stock for at least five years. That is also an unreasonably high bar and is wildly at odds with the approach to proxy access that U.S. shareholders broadly favor: requiring a nominating shareholder or group of shareholders to have owned at least 3 percent of voting shares for at least three years.

CII has sent a similar to other companies who have asked for no-action relief to exclude proposals.  CII has also sent a letter to the SEC asking the SEC to reconsider its approach.