While Semler Brossy’s guide (see above story) provided an overall look at 2020 vote results for the Russell 3000, including a specific breakout of companies with a fiscal-year end during Q2, Georgeson’s 2020 Annual Corporate Governance Review dives into vote results for specific shareholder proposals as well as director elections and say-on-pay at S&P 1500 companies.
- Overall support for governance proposals declined from 35.2% to 32.4%.
- Of the 25 proposals submitted related to executive compensation, one received greater than 50% support (Clawback Policy at Stericycle Inc., page 56).
- The number of environmental and social proposals that went to a vote was nearly flat, 162 in 2020 versus 160 in 2019.
- However, the number of passing proposals increased notably, from 8 in 2019 to 18 in 2020.
- Support for board diversity proposals increased from 21% to 28%.
- Support for gender/racial and employment pay disparity declined from 21% to 14%.
It remains to be seen how the events of 2020 will affect shareholder proposals going forward. Will COVID-19 drive specific proposals? Will the racial justice movement drive increased proposals and/or companies’ willingness to engage stakeholders on the issues prior the meeting?Additionally, on Nov. 23rd, the SEC finalized rules significantly increasing the eligibility thresholds for shareholders to submit proposals or to resubmit proposals previously voted on and not approved. The SEC’s rules will not be effective until 2022, so some shareholders may push to submit proposals in 2021. Typically, shareholder proposals are submitted by activist investors, socially responsible investor funds (such as Arjuna Capital), or pension and labor funds. However, if many of those shareholders are no longer able to meet the thresholds, larger institutional investors such as BlackRock and State Street may decide (or feel pressure) to submit proposals themselves.