2013 Proxy Season Review

James C. Morphy is a partner at Sullivan & Cromwell LLP specializing in mergers & acquisitions and corporate governance. The following post is based on the executive summary of a Sullivan & Cromwell publication by Glen T. Schleyer; the complete publication, including footnotes, is available here.

The 2013 proxy season saw a continued high rate of governance-related shareholder proposals at large U.S. public companies, including those calling for declassified boards, majority voting in director elections, elimination of supermajority requirements, separation of the roles of the CEO and chair, the right to call special meetings and action by written consent. As in prior years, many of these governance-related proposals received high levels of support, and a number received majority support from shareholders.

In addition, during the 2013 proxy season, U.S. public companies had, on average, slightly better results on their say-on-pay votes. Large-cap companies, in particular, showed an improved ability to avoid negative results, and most companies that failed say-on-pay votes in 2012 received strong support in 2013. These results reflect companies’ increased efforts to engage with shareholders, understand and anticipate their concerns, and communicate the company’s actions and positions.

Shareholder proposals on social issues (particularly those related to political contributions and lobbying costs) and compensation-related issues (particularly those relating to stock retention and acceleration of vesting upon a change-in-control) also remained common but, as in the past, these proposals generally received far lower support than corporate governance proposals, rarely received a majority vote and served primarily as a vehicle for shareholder activists to focus attention on these issues.

In this memorandum, we:

  • Quantify and discuss various categories of shareholder proposals voted on this season, and highlight important trends and legal developments, including trends in management proposals to implement governance reforms;
  • Analyze the results from 2013 say-on-pay votes, including the greater success of large companies in avoiding problematic vote results;
  • Discuss the primary drivers of negative recommendations by Institutional Shareholder Services on say-on-pay proposals;
  •  Analyze the key reasons that directors of U.S. companies received “withhold” or “against” recommendations from ISS in 2013, and the impact of these recommendations on voting results; and
  • Highlight the increased use by shareholder proponents of new avenues for publicizing their arguments and counterarguments regarding their proposals.
Post a comment or leave a trackback: Trackback URL.

Post a Comment

Your email is never published nor shared. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

  • Subscribe

  • Cosponsored By:

  • Supported By:

  • Programs Faculty & Senior Fellows

    Lucian Bebchuk
    Alon Brav
    Robert Charles Clark
    John Coates
    Alma Cohen
    Stephen M. Davis
    Allen Ferrell
    Jesse Fried
    Oliver Hart
    Ben W. Heineman, Jr.
    Scott Hirst
    Howell Jackson
    Robert J. Jackson, Jr.
    Wei Jiang
    Reinier Kraakman
    Robert Pozen
    Mark Ramseyer
    Mark Roe
    Robert Sitkoff
    Holger Spamann
    Guhan Subramanian

  • Program on Corporate Governance Advisory Board

    William Ackman
    Peter Atkins
    Joseph Bachelder
    John Bader
    Allison Bennington
    Richard Brand
    Daniel Burch
    Richard Climan
    Jesse Cohn
    Isaac Corré
    Scott Davis
    John Finley
    David Fox
    Stephen Fraidin
    Byron Georgiou
    Carl Icahn
    Jack B. Jacobs
    Paula Loop
    David Millstone
    Theodore Mirvis
    James Morphy
    Toby Myerson
    Morton Pierce
    Barry Rosenstein
    Paul Rowe
    Rodman Ward