Clorox to Open Board Nominations to Certain Shareholders

Clorox Co. has adopted a so-called proxy-access policy allowing certain shareholders to nominate members to its board, the company said Friday.

The Securities and Exchange Commission brought the issue to the forefront in 2010, adopting a rule that required companies to list shareholder nominees on corporate proxy ballots, rather than mailing separate ballots and waging a potentially costly campaign. A federal appeals court ruled against the SEC, however, saying the agency hadn't adequately analyzed the costs and impact, and failed to prove its claim that the change would improve shareholder value and board performance.

Companies have increasingly adopted changes in governance that are considered more favorable to investors, with proxy access provisions being by far the most popular—and successful—in 2015, according to Institutional Shareholder Services, the biggest U.S. proxy-advisory firm.

Most of those proposals, ISS said, are modeled on the SEC's 2010 proxy-access rule and call for a 3%, three-year ownership requirement and up to 25% of board seats.

Under Clorox's new guidelines, shareholders with at least 3% of the company's shares outstanding and who have held the shares for at least three years will be able to nominate candidates for up to 20% of the board. Up to 20 shareholders can combine their stakes to reach the 3% ownership threshold.

Clorox's directors are elected annually by majority vote. Currently, 10 of the 11 directors are independent, with the company's chief executive being the only management director.

In a regulatory filing Friday, the Oakland, Calif., company said it had been considering the change as part of a broader corporate-governance practices review when it received a proxy-access proposal for its annual shareholder meeting, which will be held in November.

"After thoughtful dialogue and input from some of our largest stockholders, our board decided to adopt a proxy access framework that we believe best serves our company and our stockholders," the company said.

Clorox, which in 2011 defended itself against a hostile takeover from billionaire Carl Icahn , cautioned against such shareholder activism in its latest annual financial report with the Securities and Exchange Commission.

Write to Maria Armental at maria.armental@wsj.com

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(END) Dow Jones Newswires

August 28, 2015 19:45 ET (23:45 GMT)

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