2020 Proxy Season Review: Part 1—Rule 14a-8 Shareholder Proposals

Sullivan & Cromwell LLP - July 15, 2020
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Environmental, social and political (ESP) proposals:

  • Total ESP submissions decline, but percentage voted and number of passing proposals increase
  • Environmental proposals predominate ESP submissions, as demand for climate change and other ESP reporting increases and proposals for adoption of Sustainability Accounting Standards Board and Task Force on Climate-Related Financial Disclosures standards typically receive over 60% support
  • Political and lobbying proposals decrease in number but are voted at a record rate (over 80%), with five passing (most since 2014)
  • Human capital management and social capital management proposals rise, in part due to increase in workplace diversity proposals; nearly half reach a vote but average support remains low
Governance proposals:
  • Although overall number of governance proposals continues a five-year decline, structural governance proposals make comeback due to resurgence in written consent and special meeting proposals (increasing 61% and 33.3%, respectively); significantly fewer structural governance proposals pass due to decline in submission of high-pass rate proposals (e.g., elimination of supermajority voting thresholds)
  • Independent chair proposals decrease (by 30%) but receive higher average support
Compensation Proposals:
  • Requests to tie ESP performance to compensation targets increase as a percentage of compensation proposals

View Part 2 of S&C's 2020 Proxy Season Review regarding say-on-pay votes and equity compensation: