NEW YORK, Sept. 17, 2013 /PRNewswire/ -- While the
number of shareholder proposals filed at U.S. public companies
continued to increase this year, management has been less
successful at obtaining permission from the Securities and Exchange
Commission (SEC) to exclude new types of investor demands from the
voting ballot. The finding is discussed in Proxy Voting
Analytics (2009-2013), released today by The Conference Board
in collaboration with FactSet.
The report, which examines data from more than 2,400 annual
general meetings (AGMs) held at Russell 3000 companies between January 1 and June 30, 2013, shows that
shareholders submitted 769 proposals on a variety of topics, up
nearly 6 percent from the 726 recorded during the same period in
2012. Among S&P 500 companies, the number of filed shareholder
proposals increased from 585 to 612 (or 4.6 percent). Both indexes,
however, showed a sensible decline in the proportion of proposals
that were omitted based on no-action relief granted by the SEC
staff: from 24.5 to 22.3 percent among Russell 3000 companies and from 27.7 to 23.7
percent in the S&P 500.
"In the last few years, companies increasingly sought guidance
from the SEC on the excludability of a variety of new proposal
types, especially in the areas of executive compensation and
environmental and social policy," says Matteo Tonello, managing director of Corporate
Leadership at The Conference Board and coauthor of the report. "In
the 2013 proxy season, while no-action requests continued to
increase in number, the percentage of exclusions granted by the SEC
was lower, in a sign that investors are learning from the most
recent interpretive guidance and perfecting the formulation of
their new demands so as to comply with securities regulations."
"The proportion of proposals reported as withdrawn also
increased, signaling improved engagement between shareholders and
companies," says Melissa Aguilar, a
researcher at The Conference Board and a coauthor of the study.
"Withdrawals were most frequent among proposals related to social
and environmental policy and executive compensation, areas where
shareholders often use precatory proposals as a way to start a
dialogue about their concerns." During the January—June period, the
level of proposals withdrawn rose to 10.1 percent, up from 5.9
percent in 2012 for the Russell
3000, and to 11.5 percent for the S&P 500, up from 6.5 percent
during the same period last year.
Other findings highlighted in the new Proxy Voting Analytics
(2009-2013) include:
- Hedge fund proposals started to rebound in 2013, after the
sharp decline registered following the record levels of 2009. A
more speculative, short-term approach to shareholder activism may
be resurfacing, as the economic situation continues to
improve.
- Religious groups were also more frequent proponents this year,
while labor unions softened their activity amid waning interest in
traditional demands for executive compensation disclosure.
- As activist investors begin to shift their attention to new
topics, the percentage of voted proposals winning the support of a
majority of shareholders reached a five-year low.
- Shareholders continued to challenge management on key
governance issues of board declassification and majority voting, in
particular by targeting smaller companies. The Harvard Law
School Shareholder Rights Project initiated nearly all of the
successful proposals seeking to declassify boards.
- Although there has been a resurgence of shareholder proposal
activity related to executive compensation, with a focus on new
issues, public pension funds were seldom proponents and none of the
resolutions voted in 2013 received majority support.
- Despite overall low support and high abstention levels,
year-on-year voting results show that certain social and
environmental issues—including board diversity, sustainability
reporting, and human rights—are steadily gaining traction among
investors.
- Political spending and lobbying proposals comprised nearly 40
percent of social and environmental policy proposals in 2013. While
overall support remains low, it often depends on the formulation.
Average support was higher for traditional proposals seeking more
disclosure, while newer variations (such as those requesting a
complete ban on political spending or calling for the adoption of a
strict ratio between corporate assets and political spending)
performed more poorly.
- Shareholders were more successful in getting proxy access
proposals onto corporate ballots this year, and two companies
submitted their own access proposals to shareholder votes.
- Director opposition levels and the volume of proposals to elect
a dissident's nominee continued to remain far below the record
numbers of 2009, as say on pay and opportunities for constructive
dialogue provide shareholders a more economical alternative to
pursue corporate changes.
- Efforts to improve communication of the rationale for
executive compensation policies can pay off, with an average
increase of nearly 16 percentage points in year-over-year
say-on-pay support levels for certain companies.
- Shareholders engaged in more proxy contests and, in a sign
that activism as an investment strategy may be evolving further,
they started to set their sights on larger companies.
Record-low borrowing costs and the search for new asset classes are
fueling an increasing interest in shareholder activism tactics by
mainstream investors, including pension funds.
Download the Executive Summary at:
http://www.conference-board.org/proxy2013. The complete report,
Proxy Voting Analytics (2009-2013), will be released in
October. For an advance copy, contact Peter
Tulupman (212) 339-0231 /
peter.tulupman@conference-board.org
About The Conference Board
The Conference Board is a global, independent business
membership and research association working in the public interest.
Our mission is unique: To provide the world's leading organizations
with the practical knowledge they need to improve their performance
and better serve society. The Conference Board is a non-advocacy,
not-for-profit entity holding 501(c)(3) tax-exempt status in the
United States. For more information, please visit
www.conference-board.org
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