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Is Proxy Access the Best Defense to Proxy Access?

By | January 28, 2012

Western Union received a shareholder proposal under Rule 14a-8 from Norges Bank.  The proposal includes a resolution, the adoption of which by Western Union’s stockholders would amend Western Union’s By-laws to implement a form of “proxy access”. Pursuant to the proposed amendment a holder of 1% of Western Union’s common stock (or group of stockholders collectively owning such amount) who has held such stock continuously for one year would have the right, subject to certain other requirements, to include a limited number of its nominees for election to Western Union’s Board of Directors, and information relating to such nominees, in any proxy statement of Western Union relating to any meeting of stockholders of Western Union at which any director is to be elected.

Western Union has submitted a no-action letter to the SEC seeking exclusion of Norges Bank’s proposal pursuant to Rule 14a-8(i)(9) because the proposal directly conflicts with a proposal to be submitted by Western Union at the annual meeting.  The management proposal would amend Western Union’s Bylaws to implement a form of “proxy access”. Pursuant to such amendment, a holder of 5% of Western Union’s common stock (or group of stockholders collectively owning such amount) who has held such stock continuously for three years would have the right, subject to certain other requirements, to include a limited number of its nominees for election to the Board, and information relating to such nominees, in any proxy statement of Western Union relating to any meeting of stockholders of Western Union at which any director is to be elected. Because the Proposal requests that the stockholders of Western Union adopt a By-law amendment which also provides such “proxy access”, but on different terms, Western Union believes that the Proposal would be in direct conflict with the management proposal. Thus, if included in the 2012 Proxy Materials, an affirmative vote on both Western Union’s management proposal and the Proposal could lead to an inconsistent, alternative, ambiguous and conflicting mandate from stockholders.

It is difficult to tell whether Western Union approach will be adopted by other companies.   Whether or not the SEC permits exclusion, it is a viable counter force to overly broad proposals submitted by shareholder activists in current and future years.

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Contact Steve Quinlivan for more information.