One of the main purposes of this proposal is to give shareholders the right to formally participate in calling for a special shareholder meeting regardless of their length of stock ownership.
Special meetings allow shareholders to vote on important matters, such as electing new directors that can arise between annual meetings. It is especially important to enable 10% of shares (in preference to 20% of shares) to call a special meeting to make up for our classified board regime. The 2019 Elevance Health proxy described our bulletproof classified board regime with its entrenching 3-year terms for directors.
Contractual obligations with the Blue Cross and Blue Shield Association supposedly make the Elevance Health 3-year director terms almost bulletproof according to our Elevance Health directors. Plus our directors have shown no interest to make arrangements with the Blue Cross and Blue Shield Association to allow annual election of each director.
It is especially important for shareholders to be able to call a special shareholder meeting to replace poor performing directors rather than to be required wait for 3-years to replace poorly performing directors. Plus we have no right to act by written consent which would be another means to replace poorly performing directors in a timely manner.
A 10% stock ownership threshold is also important because the current 20% stock ownership threshold for shareholders to call a special meeting may be unreachable due to time constraints and the detailed technical requirements that can trip up half of shareholders who want a special shareholder meeting. Thus the 20% stock ownership threshold to call a special meeting can be a 40% stock ownership threshold to call a special meeting for all practical purposes.
This proposal topic with the 10% stock ownership threshold won impressive 49%-support at our 2020 annual meeting. This 49%-vote was all the more impressive because it absolutely represented a majority vote from the shares that had access to independent proxy voting advice and who made the most informed voting decisions.
The lack of a shareholder right to elect each director annually and the complete lack of a shareholder right to act by written consent are each such a serious loss for shareholders at Elevance Health that it motivates shareholders to insist on the most shareholder friendly standard of a right to call a special meeting.