Developments in Governance and Disclosure: Three-Year Shareholder Proposal Trends
Based on ISS data, over the last two years the percentage of shareholder proposals submitted that pertain to more traditional governance matters (e.g., shareholder rights and board composition) and the number of shareholder proposals pertaining to environmental or social matters (e.g., climate change and human rights) have been nearly equal. When evaluating the last three years of data, there was a marked decrease in governance proposals and corresponding increase in environmental and social proposals between 2016 meetings and 2017 meetings.
For 2018 meetings, approximately 40% of shareholder proposals reported by ISS related to governance matters, while 41% related to social or environmental matters, and for 2017 meetings, approximately 42% of shareholder proposals related to governance matters, while approximately 40% of shareholder proposals related to environmental or social matters. In comparison, for 2016 meetings, approximately 50% of shareholder proposals related to governance matters, while approximately 30% of shareholder proposals related to environmental or social matters.
Over the last three years, certain subcategories of shareholder proposals — in particular, proposals relating to climate change, greenhouse gas (“GHG”) emissions and diversity-related matters — have been well represented. There has been a significant fluctuation among the top governance proposals submitted over the past three years, and while proxy access proposals are no longer as well represented as they were for 2016 meetings, they remain relevant, as do “fix” proxy access proposals (i.e., proposals requesting that the board make specific changes to a previously adopted proxy access provision). The following subcategories of proposals have been the most recently submitted over the last three years:
The number of environmental proposals receiving significant shareholder support has been slowly increasing over the last three years. Based on ISS data, shareholder proposals receiving majority shareholder support1 during the last three years were:
We saw a number of emerging shareholder proposals during the 2018 proxy and proposal season. Specifically, there were approximately:
- 10 proposals requesting a report on governance proposals implemented to monitor and manage financial and reputational risks related to the opioid crisis in the U.S. and seven proposals touching upon drug prices;
- six proposals requesting a report on “truthful” news operations;
- three proposals touching upon cybersecurity and cybersecurity risk matters; and
- two proposals requesting reports on gun violence or safety.
In addition, although not entirely new to the 2018 proxy and proposal season, there also were approximately three proposals that touched upon corporate tax practices.
As a reminder, there is currently a bill before the House Financial Services Committee, which would increase the ownership threshold under Rule 14a-8 from $2,000 worth to 1%, and would also increase the resubmission thresholds and impose restrictions on “proposals by proxy.”
1 Majority shareholder support is measured by the number of votes cast “for” the proposal divided by the number of votes cast “for” the proposal plus the number of votes cast “against” the proposal, without regard to abstentions or broker non-votes, regardless of the company’s specific voting standard.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.