BancFirst Corp. will become the first Oklahoma public company to ask its shareholders to vote on putting its entire board of directors up for re-election each year after Gov. Mary Fallin signed a bill on corporate governance reforms in March.
While there are other companies incorporated in Oklahoma that already have declassified board elections, notably OGE Energy Corp. and ONEOK Inc., BancFirst will be the first public company to move away from putting up only a portion of its directors up for election each year since the state law was changed this spring. The banking company will ask shareholders to approve the change at its annual meeting on May 23.
While public companies have long used staggered board elections as a safeguard against corporate raider-style takeover attempts, the practice has fallen out of favor with shareholder rights advocates, BancFirst CEO David Rainbolt said.
“Since we implemented a staggered board in 1998, they have become unpopular with the institutional shareholder rating services,” he said. “Letting the whole board stand for election every year is actually easier to administer.”
Fallin signed legislation in March allowing large public companies in the state to once again hold across-the-board votes on directors, reversing a state law that was enacted in 2010.
That year, Chesapeake Energy Corp. lobbied to change Oklahoma corporate law to require large public companies in the state to elect only a portion of its directors annually. The energy company had been under pressure from shareholders to move to annual board elections. The state law was amended again in 2012 with minor revisions to accommodate OGE Energy and ONEOK, which already had moved to annual board elections for all of their directors before 2010.
Chesapeake moved to support the 2013 law change after a boardroom shake-up that led the company to embark on several governance reforms over the past year. At its annual meeting on June 14, Chesapeake will ask shareholders to approve a switch to annual director elections for its entire board beginning in 2014.
Rainbolt said BancFirst is switching to annual elections not because of the law change, but to boost the company's governance scores with shareholder ratings services.
“The reason we are doing away with staggered boards is the same reason the legislature got rid of it — it has become unpopular,” Rainbolt said. “We want to stay current in our corporate governance.”
Denver-based shareholder activist Gerald Armstrong, who owns BancFirst stock, said he is pleased with the company's move to put its board of directors up for election each year.
“It's nice to see a company doing things the right way,” he said.