Press Release / News
08 January, 2013
The effects of say on pay on shareholder
engagement, the introduction of proxy access proposals, and the resurgence
of board declassification resolutions were the principal themes of the
last proxy season and are expected to continue to take center stage in
2013, according to a report issued today by The Conference Board in
collaboration with FactSet Research Systems Inc.
Proxy Voting Analytics (2008-2012)
analyzes data on voting by shareholders of U.S. companies that held their
annual general meetings (AGMs) in the January 1-June 30 period during the
last five years. Aggregate data on shareholder proposals, management
proposals, and proxy contests is examined and segmented based on market
index (whether the Russell 3000 or the S&P 500) and 20 business industry
“The annual general meetings of the last
couple of years have been closely observed as a test on the effective
implementation of the advisory vote of shareholders on executive
compensation plans, now mandatory in the United States,” said Matteo
Tonello, managing director of Corporate Leadership at The Conference Board
and the co-author of the report with researchers Melissa Aguilar and
Thomas Singer. “Generally, year-over-year comparison of voting results
proved that say on pay can function as a catalyst to greater company
awareness of current compensation issues as well as to more engagement and
transparent communication with investors.”
Board declassification was by far the hot
governance issue of 2012 shareholder meetings, as confirmed by the
increased volume of this proposal type and the staggering average support
level of 80 percent of votes cast recorded in the Russell 3000. Interest
in this issue by activist investors had been shown for some time, and high
levels of support were documented in the 2011 season as well. But the
numbers of 2012 confirm that shareholders are determined to question the
rationale for not having all corporate directors face a confidence vote on
an annual basis.
This year also marked the introduction of
proposals on proxy access, two of which received the approval of a
majority of shareholders and showed that there might be room for
increasing levels of support if the formulation of the resolution is
consistent with the SEC rules that were vacated by federal courts in 2011.
“Despite what could be described as an
experimental year for proponents of proxy access as they fine-tune the
language and terms under which shareholders would vote for their
proposals, proxy access proposals actually generated more shareholder
support than majority voting did in the first year it was proposed by
shareholders,” said John Laide, vice president at FactSet. “Majority vote
standards to elect directors are now overwhelmingly supported by
shareholders and have become a corporate governance best practice. If
proxy access follows a similar trajectory it will have significant
implications for shareholder activism and future proxy battles.”
The following are the major findings of
Proxy Voting Analytics (2008-2012):
shareholders filed more proposals than in prior proxy seasons, marking
the reversal of a declining trend observed since 2008.
The number of
proposals introduced by hedge funds and religious groups declined
sharply, while labor unions were the most prevalent proponent in
unionized business sectors.
shareholder proposals declined slightly amid increasing withdrawal
levels, especially among proposals on executive compensation and by
religious groups and pension funds.
environmental and social policy consistently scored low levels of for
votes and high levels of abstentions, while the percentage of executive
compensation proposals receiving majority support declined sharply.
introduction of say on pay, the focus of shareholder proposals related
to executive compensation has shifted to specific themes such as
severance agreements and tax gross-ups.
overall decline of average support levels for executive compensation
proposals, shareholders confirmed their support for those to limit
golden parachutes and golden coffins.
proposals on the right to act by written consent lost traction in the
2012 proxy season, while the issue of board declassification received
overwhelming investor support.
proposals received solid average support by shareholders in 2012, but
only two of the 14 filed passed.
surge of shareholder proposals on corporate political contributions and
lobbying activities, support level remained low.
One out of 10
companies in the Russell 3000 is subject to increased scrutiny by proxy
advisory firms as a result of their unsatisfactory say-on-pay vote in
year-over-year comparison of voting results confirms that say on pay can
be a catalyst to improved corporate-investor communication.
resolutions were being voted on during the 2012 proxy season, management
nominees to the board of directors faced less opposition by investors.
Source: Proxy Voting
The Conference Board/FactSet
About The Conference Board
The Conference Board is a global,
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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
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the United States.
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information and analytics, helps the world’s best investment professionals
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SharkRepellent, provides information on takeover defense and proxy related
issues. FactSet’s corporate activism database, SharkWatch, provides access
to detailed activist investor profiles. The Company was named the 2012
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