Milwaukee-based Harley-Davidson Inc. plans to allow certain shareholders to begin nominating candidates for its board of directors.
Known as “proxy access,” the process would allow shareholders – or a group of up to 20 shareholders – who have owned at least 3% of Harley’s stock for at least three years to nominate at least two potential directors, according a filing with the SEC.
“Harley-Davidson supports shareholder rights,” the filing says. “Adopting proxy access will further strengthen the rights of the company’s shareholders.”
A company spokesperson did not immediately respond to a request for additional comment.
Shareholders looking to make a nomination would need to provide the company notice four to five months before the anniversary of the previous year’s proxy statement mailing date. Nominees would also have to meet requirements like director independence standards.
Loaned shares would count towards the 3% threshold under certain circumstances.
The largest shareholders of Harley-Davidson stock, according to the company’s 2019 proxy statement, include The Vanguard Group Inc. at 11.1%, The Bank of New York Mellon Corp. at 8.39%, BlackRock Inc. at 6.83%, Dodge & Cox at 6.11% and Invesco Ltd. at 5.27%.
The changes to Harley’s by-laws to allow for proxy access still need to be approved by shareholders at the company’s annual meeting this spring.
Proxy access rules have been growing in popularity in recent years. By the end of 2018, 71% of S&P 500 companies allowed for the practice, up from just 1% in 2014, according to research from Chicago-based Sidley Austin LLP. Among Russell 1000 companies, 48% used the practice at the end of 2018.
The threshold of owning 3% of shares for three years is the most common approach, according to Sidley Austin.
The firm found that 90 proxy access proposals were adopted in 2018, down from 131 in 2017 and 226 in 2015.
In 2018, there were nine management proposals for proxy access with seven approved. The nine proposals averaged 97% support. The same year there were 14 shareholder proposals for proxy access with just four approved and average support of 42%.
The Sidley Austin research notes that as of early 2019, there had been just two cases of shareholders attempting to use proxy access to nominate directors in the U.S.
