Proxy season 2013 is over, and various reports and summaries of the season are now available. In a few months the season for shareholder proposal submissions will begin. Today we’re taking a look at some of the highlights of proxy season ’13– particularly the types of shareholder proposals introduced.
“Taking action on prior years’ shareholder votes and increased shareholder engagement helped companies win positive proxy votes this year”, reports Corporate Secretary.
Ernst & Young shares similar findings. Overall responsiveness to shareholder concerns payed off. While the number of shareholder proposals increased by 6% from last year, the number of shareholder proposals withdrawn before a vote also increased, “most often because the company has engaged with shareholder proponents” (Ernst & Young). Benefits of stepping up shareholder engagement efforts have included “higher votes on certain proxy proposals, and getting activist shareholders to withdraw proposals” (Corporate Secretary). Companies benefited from efforts to speak with investors– they saw shareholders withdraw proposals regarding board reclassification, majority voting for directors, and separating the positions of CEO and chairman. By adding disclosure on company websites, shareholders were persuaded to withdraw proposals on political spending, sustainability and environmental reporting and board diversity, according to Rhonda Brauer, senior managing director for corporate governance at Georgeson.
What kinds of proposals topics were introduced by shareholders? Ernst & Young reports that the largest category (40%) of shareholder proposals consisted of environmental and social topics. Shareholders were particularly focused on increased transparency about the management of sustainability-related risks and opportunities. Other popular categories were corporate governance and executive compensation.
The increase in shareholder proposals was significantly driven by an increase in proposals related to executive compensation. This is still lower than the number of proposals related to executive compensation between 2006 and 2010. Now that “say on pay” votes are mandatory for all public companies, there’s no need for shareholders to support the idea of introducing a similar proposal. As Proxy Monitor reports, “as mandetory say-on-pay entered their third year, it appears that shareholders interested in executive-compensation issues are seeking new approaches to modifying senior management’s pay.”
Who’s behind the shareholder proposals?
In 2013 shareholder proposals were introduced by a small subset of investors: institutional investors affiliated with organized labor, institutional investors with an social investing pupose (or affiliated with a religious or public policy group), and a small number of investors who repeatedly file common classes of proposals at multiple companies, sometimes known as “corporate gadflies”.
Read more information from our sources:
Corporate Secretary: 2013 Proxy season: webcast reviews first half
Proxy Monitor: 2013 Proxy Season Review
Ernst & Young: Proxy season: top 10 governance trends for 2013