CII open to comments on class votes proposals

May 8th, 2024

The Council of Institutional Investors (CII) has invited members to comment on its proposal calling for dual-class companies to provide vote results on a class-by-class basis.

Under a typical dual-class structure, companies have two classes of common stock: Class A shares with 10 votes per share for the founders and Class B shares with one vote per share for public shareholders.

While the majority of US companies have a single class structure, the dual-class structure has become more popular in recent years, as nearly one in four (24%) US companies that went public in the first half of 2021 did so with a dual-class structure, according to the CII.

CII is a nonprofit, nonpartisan association of US asset owners, primarily pension funds, state and local entities with combined assets of $5 trillion.

Under the current rules, voting results for companies with a dual-class structure are reported only with aggregated tallies as “passed” or “failed”, forcing investors to make assumptions about what the tallies would have been without the structure.

The CII’s proposal would call on companies with a dual-class structure to publish a class-by-class disclosure of vote tallies.

The CII said: “By providing class-by-class disclosure of vote tallies, companies’ shareholders, and the board members who represent them, would have the means to determine, and potentially respond to, instances where a proposal’s adoption or failure is inconsistent with the explicit preference of shareholders representing a majority of outstanding shares.”

It noted that in this proxy season, a poultry company received a shareholder proposal for an audit regarding illegal child labor. The CII said it appears that the proposal may have passed on a one-share, one-vote basis but it is not possible to know without a class-by-class breakdown.

As a CII member, Minerva Analytics will provide comments on the proposals next week.

CII members are invited to comment on the proposal, which can be read in full at CII's Comment Opportunity Tracker under “Vote Results by Share Class”, with comments due by 5 PM PT, Wednesday, May 15.

Minerva's blog focuses on the latest developments in ESG investing and stewardship. Minerva is a global provider of sustainable stewardship solutions with over 25 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data, enabling them to navigate the intricate landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.