US companies including JPMorgan Chase to eBay have been the target of scrutiny from shareholder groups for attempting to neutralize an escalating campaign to empower investor oversight of company management.

A corporate governance campaign aims to make it easier for shareholders to call special meetings. In order to do this, they push to lower the required level of investor support. This movement has gained momentum during the past year.

However, companies have started fighting back with what campaigners say equals to a spoiler tactic aimed to thwart their efforts. JPMorgan gained support for the status quo during a vote earlier in the week. The issue is scheduled for another discussion at eBay later this month.

Shareholders can call special meetings outside of the regular schedule for annual meetings, and this can be used as a powerful weapon to oust directors or insist other changes in the management of publicly-listed companies.

Even if shareholders exercise this right very rarely, campaigners argue that the simple existence of the threat can pressure companies to respond to investor demands more promptly.

According to corporate governance consultancy ISS Corporate Solutions, shareholders have already filed formal proposals that will make it easier to demand special meetings at a record 61 US-listed companies this year. Around 24 proposals have been filed last year and garnered high average shareholder backing of 42 percent.

“It’s being watched closely,” stated Peter Kimball, who is ISS Corporate Solution’s head of advisory.



Meanwhile, at JPMorgan, Kenneth Steiner has called on the bank to accede to future demands of a special meeting if 10 percent of total shareholders agreed to have one. Steiner is one of the most well-known sponsors of shareholder proposals.

However, the bank said that “a small minority of shareholders should not be entitled to utilize the mechanism of special meetings for their own interest." They also added that there were “significant costs” that can be incurred in such events.

During its annual meeting held in Texas this week, JPMorgan wanted “ratification” of its existing rules. In its rules, at least 20 percent of shareholders should back up a proposal to have a special meeting before it can be held.

Further, the S&P 500 lender Capital One made a proposal during its annual meeting earlier this month to ratify its own rules, removing a shareholder proposal to lower the percentage requirement.

The company claimed that its own proposal gave “a more effective method to commence further engagement on the topic of special meetings, rather than a vote on the stockholder proposal.”

According to Rosemary Lally from the Council of Institutional Investors, companies are being engaged in “gamesmanship” by omitting more radical shareholder proposals off the ballot. “It’s not a very democratic process when you do it that way,” she said.

JPMorgan’s management proposal have garnered 58 percent shareholder vote, while that of Capital One reached just more than half. ISS had advised shareholders to vote against the proposals from both companies.

“We asked our shareholders about a threshold that is at or lower than 400 of the S&P 500 companies,” a JPMorgan spokesman said. “Our shareholders have spoken with their vote.”

Meanwhile, eBay is aiming to ratify its existing 25 percent threshold at its annual meeting in California to be held on May 30. “The company believes that this management proposal is an effective means to obtain stockholder viewpoints and engage with stockholders,” it stated.

Even if shareholders have the right to scrutinize management during crucial annual meetings, campaigners argue that there are still high profile problems and that serious issues can emerge in between meetings.

“They’re just trying to throw down a roadblock,” stated John Chevedden, who is another shareholder campaigner who has put forward proposals to minimize threshold for special meetings. “Who’s the company to say you can’t vote for it this year?”



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