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Are you aware of the ongoing proxy season? It's a critical period that spans from April to June when public companies host their annual meetings. During this time, shareholders of publicly-traded companies are granted the valuable opportunity to vote by proxy on various shareholder proposals.
While some may perceive it as a mundane process, these proposals actually serve as a vital channel for investors to voice their concerns and act as the quintessential complaints department.
It's important to note that while shareholder proposals are not legally binding, they possess significant influence and send strong signals to corporate management. In recent years, proxy season votes have gained substantial attention, partly due to the support they have received from large mutual fund companies and proxy advisory firms that represent the interests of investors.
Unveiling the Key Highlights of the 2023 Proxy Season
Whether you're an investor or just someone interested in the inner workings of corporate governance, the proxy season is a fascinating time! Today let's look into the highlights of the 2023 proxy season so far, shedding light on the key developments that have taken place:
The 2023 proxy season commenced with a comparable number of resolutions filed as in the first half of 2022: Harvard Law's 2023 proxy season report revealed that over 800 resolutions were filed with companies in the Russell 3000 index. Among these proposals, a significant focus was placed on addressing environmental risks, such as climate change and biodiversity. Additionally, corporate governance issues, including concerns about political influence and executive compensation, accounted for approximately a quarter of the proposals.
Anti-ESG proposals rise, but support falls: Amidst the intensifying politicization surrounding ESG investing, the reported reduction in support for shareholder proposals concerning environmental, social, and governance (ESG) issues, as well as anti-ESG matters, highlights a significant trend. Resolutions achieving over 50% of shareholder votes traditionally define success in this context.
ESG proposal categories reveal diverse emerging trends: When examining average shareholder support for ESG-related proposals, industry experts observe varying trends across different categories. Some environmental proposals received low vote counts because the targeted companies had already implemented the requested changes, such as disclosing greenhouse gas emissions. On the other hand, overly prescriptive proposals, like those demanding specific carbon emissions goals, faced challenges and garnered less support. However, proposals focused on disclosure or research performed better, enjoying higher levels of approval.
Success of 'Say on Pay' shareholder proposals amid Decreasing Opposition: Within the realm of shareholder proposals, a distinctive category known as "say on pay" takes center stage, seeking to garner shareholder support or rejection of a company's executive compensation plan. These proposals can still be deemed successful by corporate pay watchdogs, even if they fall below the 50% threshold.
The landscape for such proposals is evolving, as the latest findings in 2023 suggest a decline in failure rates, pointing towards a decrease in opposition.
Harness the Power of Activism Intelligence for Informed Investment Decisions
Do you want to navigate the complexities of proxy season and shareholder activism with confidence? At DEF 14, our commitment is to empower you with the tools and knowledge to make well-informed decisions that align with your values.
As industry experts, we remain vigilant in monitoring the ever-evolving trends of proxy season and beyond, ensuring that you stay ahead of the curve. Count on us to provide the critical insights you need to navigate this dynamic landscape.
To unlock the full potential of activism intelligence and drive your investment success, connect with us today! Stay tuned for updates and transformative insights!