New Report: What to Watch for in 2014 Proxy Season

New report says to expect proposals on board structure, political spending and lobbying, repeat proposals from Chevedden, and a possible decline in activity by labor-affiliated pension funds.

New York, NY — The new proxy season is upon us and many companies are about to face shareholder proposals of all kinds at their annual meetings. What will shareholders propose this year? Who will make the proposals? Will they pass? A new report by James Copland, director of the Manhattan Institute’s Center for Legal Policy, employs new data from the Proxy Monitor database to predict the answers to all of these questions.

What did the 2013 season teach us?

• 2013 saw the lowest levels of shareholder support in the ProxyMonitor.org database (dating back to 2006): only 7 percent of proposals received majority support.
• The number of proposals on corporate political spending and lobbying are at an all-time high (they constituted 21 percent of all proposals introduced last year), though none have passed.

What has happened so far in 2014?

• There has been increased legal pushback against John Chevedden, the shareholder activist who takes advantage of the SEC’s low ownership thresholds to make identical proposals at a broad range of companies. Four companies have sued Chevedden so far this year and this increase in legal challenges may indicate that companies are more willing to fight back against Chevedden than in years past.
• As in 2013, social policy concerns rather than corporate governance have made up a plurality of shareholder proposals.
• Labor-affiliated pension funds have been less active than they were in 2013

What can we expect going forward?

• Votes on board declassification: The Shareholder Rights Project is working with institutional investors to introduce board declassification proposals at 31 S&P 500 companies.
• Decreased efforts by labor-affiliated pension funds to split chairman and CEO roles: only one of five such proposals to date came from a pension fund.
• An aggressive push by labor-affiliated fund to disclose, limit, or prohibit corporate political engagement: AFSCME, New York’s major state pension fund, and the social-investing fund Walden Asset Management are leading the charge.

Click here to read the full report.