Average support drops to 25 percent in 2013 proxy season
Shareholders introduced more proposals in the US 2013 proxy season, but received less support. Fortune 250 companies were targeted by an average of 1.28 shareholder proposals each in the 2013 proxy season, from an average of 1.21 in 2012, according to Proxy Monitor’s 2013 report. The rise was spurred by a large increase in proposals related to executive compensation, which accounts for 21 percent of proposals this year, from 16 percent last year.
At the same time, only 7 percent of the proposals received majority shareholder support, down from 9 percent last year. The report from the Manhattan Institute’s Center for Legal Policy, which includes voting results from 214 of the 250 companies, also indicates that average support for shareholder proposals fell to 25 percent in 2013 from 27 percent in 2012.
Of the 17 proposals that went to vote and won majority support, seven were related to majority-voting requirements for directors, six aimed to declassify boards and two sought the right for large shareholders to nominate directors on the company’s proxy ballot, the report states. One was aimed at separating the roles of chairman and CEO, and another was meant to allow shareholders to ‘act outside annual meetings by written consent’.
‘Given that almost all shareholder proposals to receive majority support involved majority voting or board declassification, the decline in the number of such proposals being introduced in 2013 largely explains the drop in the overall share of proposals passing,’ write the report’s authors.
While overall proposals on executive compensation rose in 2013 from last year, the number is down from an average of 27 percent of all proposals filed between 2006 and 2010, the report says. Regulation making say-on-pay votes mandatory eliminated the purpose of more than a third of the earlier compensation-related proposals, which sought shareholder advisory votes on executive compensation.
Shareholder proposals on political spending accounted for 20 percent of all proposals in the 2013 proxy season, a slight increase from 2012, the study shows. At the same time, the percentage of those proposals related to lobbying shot up to 54 percent from about 33 percent.
