AFSCME Plans to Seek Reimbursements for Proxy-Related Expenses

The American Federation of State, County, and Municipal Employees (AFSCME) is currently planning to submit binding proposals for the 2008 proxy season that call for reimbursement of proxy-fight solicitation expenses, according to a RiskMetrics blog posted yesterday by Subodh Mishra.

According to the blog, some observers feel the resolution may attract more attention in light of recent action by the Securities and Exchange Commission to bar proxy access resolutions. One such proposal by AFSCME, which was filed at the Houston-based energy company Apache, calls for reimbursement of “reasonable expenses … incurred in connection with nominating one or more candidates in a contested election of directors to the corporation’s board of directors, including, without limitation, printing, mailing, legal, solicitation, travel, advertising, and public relations expenses.”

Certain limits would be placed on the reimbursement of expenses incurred. For instance, repayment could only take place for elections after the bylaw is approved and for a “short slate” of nominees (i.e., less than half of the board) where one or more is appointed and cumulative voting is not allowed, according to the blog.

“If the reimbursement proposals do well, they may in the end supplant access,” Charles Elson, director of University of Delaware’s Weinberg Center for Corporate Governance, told Mishra. “I think it’s the ultimate solution.”