A new report by The Conference Board forecasts that the 2023 proxy season is bound to be even more challenging than in previous years. The report identifies several factors that will contribute to a tumultuous season ahead, including:
The overall volume of shareholder proposals will likely continue to rise.
There will be an increase in “anti-ESG” proposals, which often ask for the same action as “pro-ESG” proposals but have different rationales and consequences if they are approved.
Asset managers have adopted policies that will lead to more votes against directors on, among other things, governance practices and problematic compensation packages.
Investors’ diminishing tolerance for adjustments, discretion, and special grants in executive compensation is expected to result in lower levels of support for company say-on-pay proposals.
Big “A” shareholder activism is likely to rise, due in part to the current economic environment and the implementation of the SEC’s universal proxy rule.
The insights on the 2023 proxy season are based on a review of management and shareholder proposals at Russell 3000 companies for (full years) 2021 and 2022, as well as recent discussions with leading US public companies and institutional investors with over $20 trillion in assets under management.
The Conference Board produced the study with ESG analytics firm, ESGAUGE, in collaboration with Russell Reynolds Associates and Rutgers University’s Center for Corporate Law and Governance. Insights from the new analysis include:
1) Overall Takeaways: Shareholder Proposals
2022 saw a sharp rise in the volume of shareholder proposals in the Russell 3000.
E&S proposals drove the increase: In total, 871 proposals were filed in 2022 compared to 798 in 2021. And of the 871 proposals filed last year, 512 were E&S proposals.
E&S proposals saw high withdrawal levels: 34 percent of such proposals were withdrawn. At the same time, compared to 2021, E&S proposals were less likely to be omitted, a…
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