The 2018 proxy season saw shareholder proposals focus more on shareholder rights than ever before, but with less success than in past years.Â
Investors submitted 138 shareholder rights proposals at US-headquartered companies during the first half of 2018 – the highest number since 2015 – according to data from Proxy Insight, sister company to Activist Insight.
Constituting a quarter of all shareholder proposals in 2018, the category proved decidedly more popular than in recent years – the closest level was three years ago, at 21 percent. Even with the soaring numbers, however, only 12 percent of proposals in the category passed, down from 28 percent in 2017 and 40 percent in 2016, Corporate Secretary sister publication IR Magazine reports.Â
‘Shareholder rights have improved but they are far from the finish line,’ Victor Li, Kingsdale Advisors’ executive vice president of governance advisory, tells Proxy Insight, in its analysis. ‘It took a long time to get where we are now and it’s far from the end.’
One cause for the declining support rate may be a lull in the proxy access movement. Li says many investors were comfortable with adopting proxy access in the past but are now unwilling to amend what they previously supported. ‘It’s mostly over,’ he says. ‘Proxy access is taking a pause.’Â
Instead, he says proposals demanding the right to call a special meeting and the right to act by written consent are more likely to be successful – especially as these are issues activist investors care about. Indeed, so far this year, Proxy Insight data shows 17 percent of proposals requesting the right to act by written consent passed and 12 percent of resolutions amending the right to call a special meeting were approved.
By contrast to shareholder rights proposals, environmental and social resolutions saw greater support this proxy season, with 7 percent of proposals passed in the year to date compared with 3 percent in 2017, which can be attributed to a shift in focus by institutional shareholders.Â
