Newsletter: 2012 Proxy Season Review: Shareholder Resolutions (Sept. 2012)

The 2012 proxy season was a highly active one for shareholder proponents. Through August, over 1,000 shareholder proposals had been filed and nearly 500 were brought to a vote, well ahead of last year’s pace. Although two signature campaigns of the season—proxy access and audit firm rotation—were largely suppressed through company exclusions, shareholder activists more than made up for them with other proposal submissions. For a second year in a row, corporate campaign finance surpassed all other categories of resolutions in sheer number, followed by proposals calling for board declassification and the appointment of an independent chairman. Compensation-related proposals were up in count as well by nearly 50%.The number of shareholder resolutions receiving majority support, based on votes cast “for” and “against,” also increased over last year (117 in 2012 vs. 100 in 2011), though they largely occurred among three classes of resolutions: board declassification, the adoption of majority voting in director elections, and the repeal of supermajority vote requirements (see Table 1). One notable change was a drop in the number of written consent proposals receiving majority support: only six this year (29% of the total on ballots), compared to 12 in 2011 (36% of the total).Vote results only tell half the story of where shareholder activists made inroads in advancing their agendas. Over 300 shareholder resolutions were withdrawn or omitted because the companies chose to address the underlying issue in a competing management proposal. Among governance proposals, issuers primarily capitulated on board declassification, adoption of majority voting, and expanding special meeting rights. Among environmental and social proposals, companies and proponents most often reached agreements on sustainability reporting, disclosure of political and lobbying expenditures, and adding sexual orientation and gender identity to equal employment policies.

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