Recap of the 2015 Proxy Season

Simpson Thacher & Bartlett LLP recently released a PowerPoint deck, titled “Recap of the 2015 Proxy Season: What Happened, Lessons Learned and Looking Ahead to 2016.”  The deck (available here) provides an overview of the 2015 proxy season, as well as in-depth analysis regarding key developments, proposals and trends from the proxy season.

2015 Proxy Season Overview

• Increased Volume of Shareholder Proposals. The volume of shareholder proposals increased by about 6.7% at Russell 3000 companies.
  • Fortune 250 companies faced an average of 1.39 shareholder proposals.
  • The most notable increase has been in proposals seeking proxy access, which accounted for 11% of all shareholder proposals faced by large companies.
• Increased Majority Support, But Only Due to Proxy Access. Majority support for shareholder proposals reached 11%, the highest since 2010. Not including proxy access proposals, however, only three percent of shareholder proposals received majority shareholder support—the lowest level in the past ten years.
• SEC No-Action Relief Declined. The proportion of no-action letters denied by the SEC staff reached 39%, the highest level in four years.
• Impact on No-Action Letters of Division of Corporation Finance’s Decision Not to Review Requests Based on Rule 14a-8(i)(9). The SEC staff declined to issue responses to 15% of no-action requests due to its new policy of not expressing views on Rule 14a-8(i)(9).
  • The staff declined to express an opinion with regard to 25 requests to exclude proxy access proposals based on Rule 14a-8(i)(9).
  • Twelve of the 17 no-action requests seeking to exclude special meeting shareholder proposals were predicated on Rule 14a-8(i)(9). Of the 12, 11 ultimately received no substantive response. The twelfth request was granted prior to the Division’s announcement, and the proponent did not seek reconsideration.
• Shareholder Proponents. As in past years, individuals submitted the largest proportion of shareholder proposals to Fortune 250 companies in 2015.
• Shareholder Proposals. By subject matter, the largest proportion of proposals submitted to Russell 3000 companies in 2015 related to corporate governance, closely followed by proposals relating to social/environmental policies.

2015 Proxy Season Highlights

In addition to providing an overview of the proxy season, the deck discusses and analyzes in depth the following topics as they relate to the 2015 proxy season:

• policy updates from the proxy advisory firms;
• updates to ISS Governance QuickScore 3.0;
• proxy access shareholder proposals and proxy access bylaw provisions adopted by those companies that have implemented proxy access;
• shareholder proposals seeking an independent chairman;
• shareholder proposals seeking to create a shareholder right to call special meetings or to lower the threshold for an already existing right to call special meetings; and
• the Third Circuit’s decision in Trinity Wall Street Wal-Mart, which found that a shareholder proposal requesting board oversight of the formation and implementation of policies for determining whether or not the company should sell certain products is excludable under Rule 14a-8’s “ordinary business” exception.

The deck is available to download here.