Key Issues From the 2013 Proxy Season

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2013-08-30

Summary:

Editor's Note: The following post comes to us from Ted Wallace, Senior Vice President in the Proxy Solicitation Group at Alliance Advisors LLC, and is based on an Alliance Advisors newsletter by Shirley Westcott. The full text, including tables and footnotes, is available here.

During this year’s annual meeting season, issuers experienced better outcomes on say on pay (SOP) and shareholder resolutions, underpinned by a high degree of engagement and responsiveness to past votes. With SOP in its third year, companies addressed many of investors’ and proxy advisors’ pivotal compensation concerns, which was reflected in a modest improvement in average SOP support and proportionately fewer failed votes.

Similarly, although the volume of shareholder resolutions on ballots was nearly comparable to the first half of 2012, average support declined across many categories and there were 27% fewer majority votes (See Table 1). This was due in large part to corporate actions on resolutions that are traditionally high vote-getters, such as board declassification, adoption of majority voting in director elections, and the repeal of supermajority voting provisions, resulting in the withdrawal or omission of the shareholder proposal. Indeed, issuers made a conscious effort to avoid the prospect of majority votes, mindful of potential fallout against directors by proxy advisory firms. Beginning in 2014, ISS will oppose board members who fail to adequately address shareholder resolutions that are approved by a majority of votes cast in the prior year, while Glass Lewis is scrutinizing board responses to those that receive as little as 25% support (see our January newsletter).

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Link:

http://blogs.law.harvard.edu/corpgov/2013/08/30/key-issues-from-the-2013-proxy-season/

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Tags:

practitioner publications boards of directors corporate elections & voting proxy season shareholder proposals executive compensation political spending board independence say on pay proxy access proxy advisors charter & bylaws board declassification clawbacks majority voting alliance advisors shirley westcott ted wallace written consent

Authors:

Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation,

Date tagged:

08/30/2013, 13:50

Date published:

08/30/2013, 08:43