2015 Proxy Season Early Report

Corporate America's proxy season—the period between mid-April 15 and mid-June when most of the largest publicly traded corporations in the United States hold annual meetings to vote on company business, including resolutions introduced by shareholders[3]—is now in full swing. As of April 24, 158 of the nation's 250 largest companies by revenues, as listed by Fortune magazine[4] and in the Manhattan Institute's ProxyMonitor.org database (see box), had filed proxy documents with the Securities and Exchange Commission (SEC)—such that we now have a good picture of the issues facing companies in this year's proxy season.

In 2015, companies are facing more shareholder proposals on average (1.39 per company) than they have in any year since 2010. This increase has occurred even though the most frequently introduced type of shareholder proposal—that involving a company's political spending or lobbying—has been less commonly introduced than in 2013 or 2014. Driving the increase in shareholder-proposal activity has been a push for proxy access—granting shareholders the power to nominate directors to the board on the company's proxy statement—which has been pushed aggressively in 2015 by New York City's pension funds,[5] which are introducing 75 proxy-access proposals at companies as part of its  "Boardroom Accountability Project."[6]

Pension funds like New York's argue that by permitting large, long-term shareholders to nominate directors without launching a full-fledged proxy fight, proxy access enables them to have a greater voice over the companies in which they own significant stakes and to improve the returns in a broadly diversified portfolio.[7] The SEC had adopted its own proxy-access rule, Rule 14a-11,[8] in 2010; the U.S. Court of Appeals for the D.C. Circuit threw it out a year later, citing concerns that the rule might hurt ordinary investors at the expense of "investors with a special interest, such as unions and state and local governments whose interests in jobs may well be greater than their interest in share value [and who] can be expected to pursue self-interested objectives rather than the goal of maximizing shareholder value."[9] Companies and investors opposed to proxy access continue to cite concerns that overly permissive proxy-access rules could be disruptive to effective board governance.[10]

Only 44 of the Fortune 250 companies had held annual meetings by April 24—with another 17 meeting April 27 or 28 and another 11 meeting April 29 or 30. But already, a mixed verdict from shareholders on proxy-access resolutions has begun to emerge. Among the seven companies to hold votes on the topic by April 28, four companies saw shareholders give the proposal majority support, one of which (Citigroup) was with board support for the proposal. Two corporations faced competing shareholder and management proposals on the question, again with split results: at AES Corporation, a majority of shareholders supported the New York City pension funds' proxy access proposal and rejected a competing management proposal; but at Exelon, a majority supported managementжs proxy access proposal and rejected the New York City funds' proposal.

This remainder of this finding will offer an expanded look at the early 2015 proxy season, looking first at proposal filings and then at early voting results.

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