Proposals evenly split between addressing corporate governance and social policy issues
A new report says proxy access and political spending or lobbying were the most common topics for shareholder proposals at annual meetings held in the first quarter of 2017, as the proxy season builds toward its peak.
Among early-meeting companies, proposals have been evenly split between those relating to corporate governance (47 percent) and those relating to social policy concerns (47 percent), according to the report, which is based on the Proxy Monitor database. The database is sponsored by free market think tank the Manhattan Institute for Policy Research. Just 6 percent of proposals to date have involved executive compensation.
By comparison, the total mix of shareholder proposals in 2016 leaned slightly in the direction of social policy issues (51 percent), according to the report’s authors, James Copland, a senior fellow and director of legal policy for the institute, and Margaret O’Keefe, project manager for Proxy Monitor.
The growing number of shareholder proposals related to corporate governance has been driven in large part by proposals related to proxy access, the authors note. That was led by a wave of such proposals in 2015, when most companies agreed to introduce such a rule, meaning there were fewer proposals last year, they add. ‘The resurgence in proxy access-related proposals in 2017 has been driven by proposals seeking to modify companies’ already-adopted proxy access rule[s] in favor of a more permissive standard,’ Copland and O’Keefe write.
The breakdown of shareholder proposals in early 2017 is:
- Proxy access – 15
- Political spending or lobbying – 14
- Environmental concerns – 9
- Separate chairman/CEO – 9
- Executive compensation – 5
- Special meetings/written consent – 5
- Voting rules – 5
- Other social policy – 14
- Other corporate governance – 3
By contrast, a PwC Governance Insights Center online survey earlier this month finds that 39 percent of the directors and other governance-focused officials polled see executive compensation as the top-of-mind governance issue. Nineteen percent and 17 percent cite political spending and board diversity, respectively, while climate change is the top concern for 15 percent of respondents and 9 percent point to proxy access (CorporateSecretary.com, 4/13).
The 72 Fortune 250 companies holding annual meetings between the start of the year and the end of April will have faced 79 shareholder proposals, or on average roughly 1.1 per company, according to the report. By comparison, the average company faced 1.26 shareholder proposals in all of 2016 – though the report’s authors note that, historically, early filing data does not necessarily reflect the full picture of the proxy season. The first quarter of 2016 saw 1.42 shareholder proposals per company, but the comparable period in 2015 and 2014 saw only 0.96 and 0.98 shareholder proposals per company, respectively.
THE RESULTS SO FAR
None of the 34 shareholder proposals faced by 25 Fortune 250 companies at annual meetings by the end of March received the support of a majority of shareholders, the Proxy Monitor/Manhattan Institute report finds. On average, more than 78 percent of shareholders voted against each shareholder proposal on company proxy ballots. Nine shareholder proposals fared better, receiving the support of between 30 percent and 40 percent of shareholders:
- Three sought to amend the company’s proxy access rules in favor of a more permissive standard for shareholders to nominate directors
- Three sought additional corporate disclosures concerning political spending or lobbying
- One sought to separate the company’s chairman and CEO
- One sought to empower shareholders to act by written consent
- One sought a report on food waste.
Meanwhile, executive compensation votes went strongly in favor of companies: through the end of last month, the average shareholder support was just under 92 percent, slightly above the 90 percent average for all of 2016. More than 90 percent of shareholders supported executive compensation at 81 percent of companies, up from 72 percent in all of 2016 – and more than in any complete year since compensation advisory votes began in large numbers in 2011, according to the report.
Under the Dodd-Frank Act, most companies this year have had to resolicit shareholder opinion on whether executive votes should be held annually, biennially or triennially. Among the 22 companies holding votes on how often to hold executive compensation advisory votes by the end of March, 19 recommended annual shareholder advisory votes and between 88 percent and 97 percent of shareholders agreed with these board recommendations, the authors find.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
