Omnicom has sued activist shareholder John Chevedden in federal court to exclude a governance proposal from the advertising and PR conglomerate's 2014 annual meeting.
The California-based investor has been targeted with suits by several corporate law firms across the country as he fires off scores of shareholder proposals per year. Chevedden, who says he holds stock in about 80 companies, has been sued four times in the last two months, including the Omnicom suit filed in January.
His proposal for OMC would implement confidential voting for management-backed matters like executive pay, bylaw changes and shareholder resolutions. Chevedden says it would improve governance and would mean that executives and management would not see the outcome of proxy votes on those matters before the company's annual meeting.
OMC, represented by Latham & Watkins, one of the firms that has handled suits against Chevedden, is arguing that the proposal would violate New York law and is "so vague and indefinite (and at times false and misleading) that neither the shareholders asked to vote on it nor the company asked to implement it can understand what actions it would require or prohibit," according to its complaint.
Chevedden, who has criticized high pay for Omnicom brass, including CEO John Wren's $42M+ total pay, believes management can currently monitor voting results to influence the outcome on matters in which they have a personal stake, like stock options and other pay. He also believes Omnicom's board is too entrenched and therefore less independent than it should be. He said OMC adopted versions of his 2011 and 2012 proposals regarding shareholder right to act by written consent and shareholder right to call a special shareholder meeting, respectively.
Omnicom's annual meeting is set for May 20. It has asked the court to issue a declaratory judgment by April 1 to hold that the company doesn't have to include Chevedden's proposal in its proxy statement.
Chevedden, who is representing himself in the suit, has asked the court to dismiss the complaint.
The investor estimates a 20-30% success rate for the more than 1,000 proposals he has offered, ranging from shorter board terms and confidential voting to allowing shareholders to call meetings.