Shareholder activism rises, finds
May 2, 2014
By Adam Brown
ProxyPulse study shows higher retail share ownership and rising
scrutiny of pay
Shareholder activism has
risen sharply, support for directors of small companies has fallen and
retail shareholding is up, according to a study by investor
Broadridge’s ProxyPulse study, based mainly on 2013 data, also shows
an increase in the adoption of electronic proxy material and executive
pay coming under rising scrutiny. Based on early indications for 2014,
the subjects and trends witnessed last year will probably persist, the
‘Increased shareholder activism, decreased support for smaller company
directors and increased retail investor ownership of public companies
are some of the key findings of the 2014 first edition of ProxyPulse,’
The study reveals a 69 percent increase in the number of exempt
solicitations in 2013 to 22 from 13 in 2012, while the number of proxy
contests rose 10 percent to 64 from 58. The main governance-related
issues last year, as in 2012, were board declassification, independent
board chairs and corporate political spending disclosure.
The study also shows that retail share ownership rose to account for
44 percent of the shares of companies that held investor meetings in
the second half of 2013, or the fall mini-season. The percentage of
those shares voted, however, dropped to 27 percent in the fall from 29
percent in the spring.
Support for executive compensation plans registered a drop in the
second half of 2013 from the same period in 2012, with the number of
companies receiving 70 percent or more votes in favor of their plans
declining to 82 percent from 89 percent.
‘In addition, a greater percentage of investors than directors believe
directors should consider modifying executive compensation plans at
lower levels of negative say-on-pay voting,’ Broadridge adds.
The study further shows that the average portion of shares voted in
favor of directors dropped two percentage points to 92 percent. The
drop is particularly pronounced at small-cap companies, where 7
percent of directors received less than 70 percent support. At
micro-cap companies, the figure is 10 percent.