Proxy Voting Fact Sheet PV-V3N3 | JULY 2014
Total Page:16
File Type:pdf, Size:1020Kb
Proxy Voting Fact Sheet PV-V3N3 | JULY 2014 HIGHLIGHTS • The volume of social/environmental proposals surged, • Proposals seeking to require equity retention periods driven primarily by proposals related to political spending and to prevent acceleration of vesting of equity awards and lobbying, as well as proposals related to climate upon a change in control were the most frequently voted change, sustainability reporting, and human rights. compensation-related topics during the period. • High numbers of proposals seeking changes in corporate • The overall volume of shareholder proposals submitted governance practices, such as separation of the chair/ during the first half of the year is nearly flat compared with CEO roles, board declassification, majority voting in the same period in 2013, although the number of Russell director elections, and to allow (or ease an existing 3000 companies that held meetings was slightly higher, requirement for) action by written consent reflect efforts suggesting that engagement efforts are paying off. to push governance practices adopted by most large-cap • Average support for say-on-pay votes is high and companies down to mid- and small-cap companies. consistent with prior years. However, the failed votes • Five proxy access proposals won majority support, while during four years of SOP demonstrate that companies four others received support of more than 40 percent of with high votes can’t assume they’ll get overwhelming votes cast. support the next year, especially if they had poor stock performance or made changes to their pay plans that could be viewed as problematic by investors or proxy advisors. Chart 1 Shareholder Meetings—by Index 1,395 The number of meetings in the Russell 3000 for the first half of the year was slightly Number of meetings higher than in 2013 (2,503 versus 2,442), while S&P 500 (N=441) it was flat for the S&P 500 (441 versus 440). Russell 3000 (N=2,503) Shareholder proposal volume, meanwhile, was relatively flat compared to last year (752 versus 763 in the Russell 3000, and 515 579 versus 607 for the S&P, as shown in 392 Chart 3 on page 3). 256 98 67 70 64 16 7 19 45 January February March April May June Data include companies (including non-US) that held AGMs between January 1 and June 30, 2014. Results exclude special meetings and written consents. Source: The Conference Board/FactSet, 2014. The Proxy Voting Fact Sheet contains a snapshot of the most relevant proxy season data In collaboration with for Russell 3000 companies that held annual general meetings (AGMs) between January 1 and June 30, 2014. For a description of the methodology used, see page 2. Download Proxy Voting Analytics (2009-2013) at www.conference-board.org/proxy2014. Chart 2 Shareholder Meetings—by Industry (Russell 3000) Methodology Russell 3000 companies that held AGMs during the period The Proxy Voting Fact Sheet examines shareholder comprised 20 industries. proposals submitted to business corporations registered with the US Securities and Exchange Commission (SEC) Number of meetings (percentage of total) that held their annual general shareholder meetings n=2,503 (AGMs) between January 1, 2014, and June 30, 2014, and, at the time of their AGM, were in the Russell 3000 Commercial services 141 5.6% Index. The analysis is based on data compiled by FactSet Communications 39 1.6 from public disclosures as of July 8, 2014. Consumer durables 64 2.6 Data reviewed in the Proxy Voting Fact Sheet include Consumer nondurables 65 2.6 AGM volume; shareholder proposal volume, topics, sponsorship, and voting results; and results of Consumer services 132 5.3 shareholder votes on management say-on-pay proposals. Distribution services 56 2.2 Proponent types considered in the sponsorship Electronic technology 194 7.8 analysis reflect the categorizations used by FactSet Energy minerals 105 4.2 LionShares. Shareholder proposal subjects considered in the subject analysis are executive compensation; Finance 628 25.1 corporate governance; social and environmental policy; Health services 51 2.0 and a fourth, all-inclusive “other” category comprising resolutions on director nomination, mergers and Health technology 244 9.7 acquisitions transactions, asset divestitures, or other Industrial services 67 2.7 value maximization proposals. The discussion of voting Miscellaneous 21 0.8 results is integrated with information on shareholder proposals that did not receive a vote because sponsors Nonenergy minerals 48 1.9 withdrew them, management decided to omit them from Process industries 99 4.0 the voting ballot, or for an undisclosed reason. Omission figures indicate that the company was granted no-action Producer manufacturing 158 6.3 relief from the staff of the SEC in connection with the Retail trade 127 5.1 exclusion of a shareholder proposal from its proxy materials, in reliance on Rule 14a-8 under the Securities Technology services 126 5.0 Exchange Act of 1934. Data on withdrawn proposals is Transportation 50 2.0 limited to publicly available information or information Utilities 88 3.5 provided to FactSet by the proponent or issuer. Aggregate data on shareholder proposals are examined Note: Percentages may not add to 100 due to rounding. and segmented based on business industry and company Source: The Conference Board/FactSet, 2014. size (as measured in terms of market capitalization). In addition, to highlight differences between small and large companies, in some instances, findings in the Russell 3000 sample are compared with those regarding companies that, at the time of their AGMs, were in the S&P 500. 2 Proxy Voting Fact Sheet july 2014 www.conferenceboard.org Chart 3 Voted, Omitted, and Withdrawn Shareholder Proposals—by Index The proportion of proposals that made it onto corporate By comparison, during the same period in 2013, 64.5 ballots this season was slightly higher than last year. percent of the 763 proposals submitted at Russell 3000 Roughly two-thirds (67.2 percent) of the 752 proposals companies went to a vote, while the percentage of submitted at Russell 3000 companies that held meetings omissions was higher (22.3 percent). In the S&P 500, during the period went to a vote. Less than 20 percent the percentages were relatively flat compared with last were omitted, and roughly 12 percent were withdrawn. season (62.4 percent voted, 23.7 percent omitted). In Among the S&P 500, about 63 percent of the 579 both indexes, the proportion of withdrawals for the proposals were voted, 22.6 percent were omitted, and period was slightly higher than in 2013 (11.6 percent in 12.4 percent were withdrawn. the Russell 3000 and 12.4 percent in the S&P, compared with 10.1 percent and 11.5 percent, respectively). Number of shareholder proposals (percentage of total) Russell 3000 S&P 500 n=752 n=579 Not voted, other reason Not voted, other reason Not voted, reason unspecified Not voted, reason unspecified 10 (1.3) 9 (1.6) 1 (0.1) 1 (0.2) Withdrawn Withdrawn 87 (11.6) 72 (12.4) Voted Voted Omitted 505 (67.2%) Omitted 366 (63.2%) 149 (19.8) 131 (22.6) Source: The Conference Board/FactSet, 2014. www.conferenceboard.org Proxy Voting Fact Sheet july 2014 3 Chart 4 Voted, Omitted, and Withdrawn Shareholder Proposals—by Sponsor While individuals continue to file the bulk of shareholder Public pension funds sponsored 93 proposals, down proposals, the number of proposals sponsored by hedge from 117 last year. Roughly 85 percent of those were funds and other institutions increased compared to the same voted, while about 10 percent were withdrawn, and period in 2013 (39 versus 24 and 21 versus 1, respectively). the remainder were omitted. Investment advisers, Nearly 90 percent of hedge fund-sponsored proposals went including socially responsible investors such as Trillium to a vote, while the remainder (one seeking to return capital Asset Management Corp., were the main sponsor of 60 to shareholders, one seeking the breakup of the company, proposals (down from 68 in 2013), of which 61.7 percent and two related to proxy fights) were withdrawn. went to a vote. More than one-quarter were withdrawn (16 proposals). Slightly more than half of the withdrawn The sponsor type “other institutions” had the highest proposals related to social/environmental policy issues. rate of omissions during the period (81 percent). Most of the omitted proposals submitted by those proponents Labor unions sponsored 86 proposals, down from 115 sought to cap named executive officer pay. Religious during the first half of 2013. Nearly a third of those groups had the highest proportion of withdrawn related to executive compensation, and nearly one- proposals (31.7 percent). quarter sought majority voting in director elections. Number of shareholder proposals (percentage of total) Russell 3000 Voted Omitted Withdrawn Not voted, other reason Not voted, reason unspecified Hedge funds n=39 35 (89.7%) 4 (10.3%) Individuals n=299 6 (2.0) 173 (57.9) 93 (31.1) 27 (9.0) Investment advisers n=60 2 (3.3) 37 (61.7) 5 (8.3) 16 (26.7) Labor unions n=86 1 (1.2) 70 (81.4) 9 (10.5) 6 (7.0) Named shareholders n=3 3 (100) Other institutions n=21 1 (4.8) 3 (14.3) 17 (81.0) Other stakeholders n=59 2 (3.4) 32 (54.2) 16 (27.1) 9 (15.3) Public pension funds n=93 5 (5.4) 79 (84.9) 9 (9.7) Religious groups n=41 25 (61.0) 3 (7.3) 13 (31.7) Undisclosed n=51 1 (2.0) 2 (3.9) 48 (94.1) 0 100% Note: Percentages may not add to 100 due to rounding. Source: The Conference Board/FactSet, 2014.