Related to today’s webcast – “Hot Governance and Engagement Proxy Tips You Need to Know” – courtesy of Steve Pantina of Proxy Analytics, here are 2024 proxy season stats through the end of November:
2024 Shareholder Proposal Stats
- Submitted Proposals:
- 147 shareholder proposals tracked as submitted to Russell 3000 companies.
- 104 Environmental/Social proposals (~71%), a higher proportion than the same time last year.
- 13 proposals (9%) submitted by anti-ESG proponents, proportionately lower than during the 2024 season (11%).
- Voting:
- Proposals voted: 40 vs. 46 at the same time last year.
- Average support: 26.4% vs. 28.1% same time last year and 22.9% for the whole 2024 season.
- E&S proposal support: 22.3% vs. 29.6% same time last year and 16.3% for the whole 2024 season.
- Majority-supported proposals: 3 vs. 6 at the same time last year. All governance proposals to date.
- 14a-8 No-Action Letters Activity:
- 37 letters submitted attributable to the 2025 season (33 by Russell 3000 companies).
- 10 responses to date:
- 25 letters pending, 2 withdrawn.
- Of granted requests:
- Rule 14a-8(i)(7): 7 grants.
- 55% for “seeks to micromanage” (vs. 23% in 2023 and 45% in 2024).
- 45% for “relates to ordinary business” (vs. 77% in 2023 and 55% in 2024).
- Rule 14a-8(b)/(f): 2 grants.
- Other Notes:
- No binding bylaw proposals tracked this season.
Expectations for the 2025 Season
- Proposal Submissions:
- Record-breaking numbers of proposals submitted and voted on for at least the past four seasons.
- Last year, E&S proposal submissions by traditional proponents declined. The record was driven by an increase in anti-ESG proposals and unexpected submissions.
- A marginal decline is expected this season; hard to quantify but probably less than 10%.
- Proposal Support:
- Expecting slight uptick in support, but no major changes.
- Big Three support for E&S proposals continued to decline:
- Vanguard supported 0% of E&S proposals.
- Rise in AI-Related Proposals:
- Anticipate increases in both the volume and variety of AI-focused proposals.
- Topics likely to include: AI risks, Integration into operations, board oversight.
- Issues like generative AI, algorithm bias, and workforce displacement.
- More Targeted Proposals:
- Major criticisms from investors about proposals lacking materiality or targeting already addressing material risk
- Expect some investors will address material issues more effectively, avoiding topics companies have already addressed.
- Accountability Board initiatives may reflect this trend.
- Higher Support for Anti-ESG Proposals:
- Growing push from investors to assess proposals on their merits, regardless of proponent.
- Outcomes will depend on the language in resolved clauses and supporting statements.
- No major increases expected, but case-by-case higher support is anticipated.
- Notable: NLPC press release highlighting GLC’s support for their AI proposal at Microsoft.
- New Proposals to Watch:
- Proposals targeting companies that miss climate targets.
Investor Guidelines
- Glass Lewis Updates for 2025:
- AI Oversight:
- Glass Lewis expects companies using AI to disclose the board’s role in overseeing AI-related issues.
- While no recommendations will be based solely on AI oversight in the absence of incidents, Glass Lewis may recommend against directors if insufficient oversight leads to shareholder harm.
- Board Responsiveness to Shareholder Proposals:
- For proposals receiving significant support (30%-49%), Glass Lewis expects boards to engage with shareholders and provide transparent disclosures.
- Emphasis on responsiveness, even when proposals do not achieve majority support.
- General Investor Trends:
- No wholesale changes expected in investor guidelines.
- Market trends show fewer “hard” DE&I targets and metrics, likely reflected in investor policies.
- Companies may discuss board diversity more opaquely without changing practices.
- Continued focus on director time commitments, with more updates expected in this area.
Growing Divide Between Voting and Engagement
- Engagement Trends:
- Engagement season is active, with robust discussions on E&S initiatives despite declining support for proposals.
- Increasing integration of investment and stewardship teams in engagement calls.
- Sustainability teams are more integrated with investment teams and modeling processes.
- Engagement Preparation:
- Tailor preparation to the audience:
- Identify the type of investor (active/passive).
- Request a participant list.
- Research participants’ roles within the organization.
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