Checking in on the US proxy season
‘Results from the first part of the 2016 proxy season and overall corporate governance trends continue to point to the need for proactive board-shareholder engagement,’ state the authors of the latest ProxyPulse report from Broadridge and PwC.
Summarizing the voting trends of 1,881 US public company meetings held between January 1, 2016 and May 15, 2016, the study finds that more than 30 shareholder proposals for proxy access – one of the hot governance topics carried over from 2015 – came to a vote during the first part of 2016.
‘Almost 70 percent of the companies targeted this year by the Boardroom Accountability Project reached agreement to adopt proxy access bylaws and avoid a shareholder vote,’ write the authors, while noting that more than half of the proxy access proposals of 2016 have failed to achieve majority support.
On another key issue, ProxyPulse finds that of the 1,085 say-on-pay proposals so far this season, ‘just over 3 percent failed to achieve majority shareholder support.’ At micro-cap companies, support dropped 10 percentage points, while at small caps there was a slight decrease in shareholder support, from 89 percent on average during the first part of 2015’s proxy season to 87 percent on average so far this year.
The final area examined in the mid-season report is director elections, with overall shareholder support falling from the same period last year: from January to May 2016, 151 directors at 64 different firms failed to achieve majority shareholder support – up from 126 directors for the same period last year.
Some companies appear to be failing to gain support in consecutive years. When it comes to director elections, ‘almost half of the companies that had at least one director fail to gain majority support last year also had a director fail this year.’
The same trend is seen in say on pay, where ‘43 percent of companies that failed to achieve the 70 percent support threshold in 2015 also failed to hit 70 percent this season,’ states the report.
The full proxy season report will be available in September.