Trends in top shareholder proposals from Russell 3000 companies between 2012 and 2016 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 infographics based on data compiled by MacKenzie Partners, Inc. to better illustrate the emerging control shareholders are seeking in investor-issuer relations.[Click to enlarge]
Shareholder proposals involving proxy access dominated the 2015 season for Russell 3000 companies in number, though on average, they only gained about 56% support from investors. The 12 shareholder proposals to declassify the board of directors received the most support on average: about 77%. Shareholders may have been discussing proxy access more often than declassifying the board, though both figures show that shareholders are interested in increasing their role in company measures.
This year, shareholders continued campaigning to increase influence in company operations and disclosure practices. Proxy access topped the shareholder proposal list in quantity, with political contribution/lobbying reports coming in second. Shareholders support a majority vote for the election of directors (72% average support) followed by a reduction of the supermajority vote requirement (59.5%) and proxy access (52.1%). The majority of support as of September has gone toward issuer-investor relations rather than CSR, ESG or best practices.
A closer look at the change between the 2015 and 2016 proxy seasons shows a major increase in the number and percent support of proposals concerning climate change and calling for a majority vote for election of directors. Proposals requesting an independent board chairman have also received significantly more support, though the number of proposals has decreased. Clawback of incentive payments, declassification of the board of directors, and human rights standards or policies were not among the top shareholder proposals of 2016 for Russell 3000 companies.
There was major increase in the number of proxy access proposals in 2015, despite remaining relatively stagnant between 2012 and 2014. Proposals relating to political contributions and lobbying peaked at 83 in 2014, then decreased to 63 in 2015, almost a 25% decrease. Stock retention proposals have steadily decreased since 2013, which is contingent with shareholder proposal patterns suggesting a shift of focus from issuer to investor. There was a slight increase in pro rata vesting of equity awards, which suggests that shareholders are balancing employee retainment with their shifting focus toward increased investor influence.
The only proposals showing a significant increase in support percentage was proxy access (the most significant leap between 2014–2015, from 33.9% to 55.5%). Regardless, proposals to declassify the board of directors and reduce the supermajority vote requirement received a higher support percentage consistently up to 2015, when they received 77.4% and 61.6% respectively. That the top three highest supported proposals focused on investor access and influence provides further evidence of the shift of demand—shareholders want a greater say in how the companies they invest in are being run.