Trends in top shareholder proposals from Russell 3000 companies between 2015 and 2017 suggest that amongst the largest public U.S. companies, investors are taking action to increase their level of influence on corporate standards and practices. Skytop Strategies has created a series of graphs based on data compiled by MacKenzie Partners, Inc. to better illustrate the emerging trends in investor actions.
MacKenzie Partners, Inc. is a full-service proxy solicitation, investor relations and corporate governance consulting firm specializing in mergers-and-acquisitions related transactions. The firm has offices in New York City, Los Angeles, Palo Alto, London and Washington D.C.
Their services include corporate governance consulting, securityholder solicitations, information agent services for tender and exchange offers, beneficial ownership identification, market surveillance and associated financial, investor and media relations services.
Top Shareholder Proposals 2017
What’s particularly notable for 2017 was the increase in support for sustainability-related proposals. This year, proposals relating to reports on climate change saw, on average, a 9.4% increase in support, making the total average support 35.8%. Greenhouse gas (GHG) emissions proposals were at 28.9%, up 3.7% from last year. However, while the number of climate change proposals increased from 20 to 24, there was a decrease in total GHG emissions proposals, dropping from 19 to 14.
Top Shareholder Proposal 2016 v 2017
The strongest contrasts between shareholder proposals in 2016 and 2017 were the proxy access and reduce supermajority vote requirement. For proxy access, 2017 saw a large drop in the number of proposals, decreasing from 84 to 56. The percentage of support for Proxy Access decreased as well, as 2017 saw a 6.9% drop from the 51.1% proposal support in 2016.
In contrast, the reduce supermajority vote requirement saw an increase (by one proposal), and an increase in support by 14.5% (up from 59.5% in 2016). One final notable difference was the change in proposals for pro rata vesting of equity awards. The data here shows that the number of proposals dropped from 21 to 10, yet there was a slight increase in the average support (up 1.6% from 28.3% in 2016).
Top Shareholder Proposal Trends 2015-2017: Number of Proposals
Recent trends in shareholder proposals indicate that 2018 will likely have increasing support for proposals addressing climate change & greenhouse gas emissions. However, the trends also indicate that the number of greenhouse gas emissions proposals may continue to decline, while the number of climate change proposals could grow.
By the same token, current trends also imply a continued decrease in proposals for proxy access, although the drop in support might not see as drastic of a change as the drop in number of proposals.
Top Shareholder Proposal Trends 2015-2017: Average % of Support
One of the largest changes in support was for the Reduce Supermajority Vote Requirement, as the percentage of support has shot up drastically from two years ago. After the slight dip in proposal support from 2015 to 2016, 2017 saw a major turnaround.
While the number of proposals for reports on sustainability has dropped over the past three years, the percentage of support has relatively remained unchanged. Finally, while the number of shareholder proposals for Written Consent has dropped to less than half from 2015 to 2017, the percentage of support remains comparable to that of 2016.
In summary, we can expect to see sustainability-related proposals at the forefront of shareholder interest, but whether or not they will consistently win support from a majority of shareholders remains to be seen.
A decrease in the shareholder proposals relating to proxy access, independent board chairman, pro rata vesting of equity awards and written consent would not be unlikely either. However, by how much we’ll see a decrease still depends on the concerns of the shareholders.
An important note to keep in mind is that a decrease in either proposals or average support does not necessarily mean the other will decrease as well. The same can be said about an increase in either, showing that a directly correlating relationship is not always evident.
Finally, the independent values that don’t indicate a predictable trend for what we’ll see in 2018 are proposals regarding call special meetings, majority vote for the election of directors, stock retention holding period and reports on political contributions/lobbying.
Regardless of any indicative trend, anything can happen at the will of the shareholders. It’s fair to say that 2018 promises to be another interesting year in the corporate governance space.
Robert Marese, Managing Director at MacKenzie Partners, Inc. will be a panelist for the discussion Taking the Fight Public: The Role of Shareholder Engagement on Jan. 25, 2018 in New York, NY at the Shareholder Activism conference.