Macy’s Changes its Rules to Favor Long-Term Shareholders

Inside Macy's Flagship Store Ahead of Earnings Figures
Photographer: Jin Lee/Bloomberg via Getty Images
Photograph by Jin Lee — Bloomberg/Getty Images

Macy’s (M) said on Thursday it would make it easier for the retailer’s long-time shareholders to nominate directors to its board, joining a growing chorus of companies offering such so-called “proxy access.”

Under amendments to its corporate by-laws, a shareholder, or a cluster of up to 20 investors, who has owned at least 3% of Macy’s shares for at least three years gets to nominate up to two board members or 20% of the board, whichever is a greater number, on the proxy. That allows investors of a certain standing and size not to go through the pricey process of submitting an alternate proxy. Macy’s board currently has 14 directors.

This proxy access will first be available for the 2017 meeting of stockholders, which usually takes place in May for Macy’s. The change mirrors that of (AMZN), which last week implemented the same changes. Goldman Sachs (GS), McDonald’s (MCD) and Coca-Cola (KO) are among the companies to have adopted proxy access measures.

The Wall Street Journal last week reported that proxy-advisory firm Institutional Shareholder Services found that 26%, or 129, of S&P 500 companies had adopted proxy access measures​ as of December, up from 10% in October.

While Macy’s CEO Terry Lundgren said the department store chain’s board had adopted proxy access in the spirit of “dialogue, transparency and responsiveness to the views of all shareholders,” the move comes at a trying time for Macy’s.

The retailer is coming off a year of comparable sales declines, and expects an additional 1% dip in 2015. Macy’s came under pressure from activist investor Starboard last summer, when it announced a big stake in the retailer, to spin off its most valuable real estate—which Starboard has estimated could be worth $21 billion (Macy’s total market capitalization is about $14 billion)—into an investment trust. Starboard reiterated that argument in January.


Last week, Macy’s said there has been a lot of interest from prospective investors so far, but it was too early to announce anything.

The Council of Institutional Investors has praised the emergence of proxy access in the last few years, calling it “crucial” to giving investors “meaningful” say in corporate board elections and noting that historically those have been one-sided in favor of the companies.

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