There’s been a lot of sturm und drang about proxy access, but no one has ever used it to nominate a board candidate…. that is, until now. CorpGov.net reports that, on November 9, 2016, GAMCO Asset Management Inc. (entity affiliated with activist investor Mario Gabelli) and certain affiliates used the proxy access bylaws recently adopted at National Fuel Gas Company, an NYSE-listed diversified natural gas company, to nominate an “independent highly-qualified nominee” for election to the company’s board at its 2017 annual meeting. In connection with the nomination, the proponent amended its Schedule 13D to reflect submission of the nomination. The 13D indicated that GAMCO believes its nominee’s “skill sets and highly relevant business and financial experience… will be extremely valuable” to the company and that it “is confident that its Nominee will have an immediate positive impact on the Board.” The 13D shows beneficial ownership of 7.81% of the company’s shares. It’s particularly ironic that the first use of proxy access would be by an activist investor — although Gabelli may reject that label — given that the conventional (although not uniform) wisdom has been that activists were unlikely to use proxy access and would opt instead for more traditional election contests.
As reported in this 2014 article from Yahoo Finance, Gabelli’s GAMCO Investors has in the past pressured “the company to spin off its gas utility segment from its natural gas exploration and midstream assets.” GAMCO even submitted a shareholder proposal for the company’s 2015 annual meeting, requesting the board to engage an investment banking firm to effect a spin-off of the company’s utility segment, contending that it would help to enhance the company’s underlying value. The proposal was rejected by shareholders by a ratio of more than four to one. Could proxy access be another route to the same destination? We’ll keep you posted.