Two eBay shareholders are calling for changes to eBay’s corporate governance. The move raises the question of whether eBay executives have too much control over its board of directors, which is set up to act in the interest of shareholders.
The California Public Employees Retirement System (CalPERS) and the New York City Pension Funds are urging shareholders to vote for a non-binding proposal that would give shareowners “effective access” to the director nomination process.
The two organizations explain their stance: “Providing access to a company’s proxy to permit shareowners the ability to nominate directors to the board is one of the most important rights given to the owners of a company. Without effective proxy access, the director election process simply becomes a ratification of corporate management’s slate of nominees.”
eBay opposes the proposal – among its arguments against it: “The Board strongly believes that allowing one quarter of the Board to be elected through proxy access every year may be highly disruptive, may adversely affect the continuity and effectiveness of the Board’s operations and, especially when taken together with other stockholder-nominated candidates, may have serious control-shifting implications.”
eBay called the proposal a one-size-fits-all and said, “The Board believes that the best form of proxy access for eBay differs from the proxy access construct advanced by the stockholder proponent.” The company said its Board currently intends to implement an “appropriate, reasonable form of proxy access” even if the proposal does not receive the required vote of stockholders.
But CalPERS and the NYC Pension Fund cited a 2014 report published by the CFA Institute that found that giving investors access to the proxy to nominate directors would benefit shareowners and the capital markets. “Proxy access has the potential to enhance board performance and raise US market capitalization by between $3.5 billion and $140.3 billion, and proxy access reform will not hinder board performance.”
The proposal is one of seven to be voted on at the eBay annual meeting on May 1, 2015, three of which were submitted by shareholders, including one on gender pay. eBay opposes all three of the shareholder proposals.