Nearly twice as many environmental and social (E&S) shareholder proposals at US company AGMs received majority support in 2021 than last year, Georgeson has revealed.
In the latest edition of its Annual Corporate Governance Review (ACGR), Georgeson provides a detailed analysis of investor voting decisions for S&P 1500 companies – and shows that 33 E&S proposals won the backing of most voting shareholders this year, compared to 18 in 2020.
The report shows a high level of shareholder proposal submissions compared to previous years (787) as well as an increase in withdrawn proposals: 249 compared to 109 in 2020. The number of environmental proposals that were withdrawn nearly doubled in 2021 (72) compared to the prior year (41).
“The results of the 2021 proxy season highlight the monumental change in investor focus towards ESG risks and opportunities, particularly climate change and workforce diversity,” said Hannah Orowitz, Senior Managing Director and US Head of ESG, Georgeson.
“The notably large number of negotiated settlements or withdrawn proposals in advance of 2021 annual meetings, especially those focused on environmental topics, is indicative of the high level of shareholder engagement that occurs during the off-season before proxy statements are filed.”
“2021 also brought the mainstreaming of ESG-focused activism and active ownership, with shareholders using their proxy votes more frequently against individual directors of companies where ESG practices fell short of their expectations.”
Georgeson’s review also shows that more than one-third (13 out of 36) of environmental shareholder proposals passed with average support exceeding 39%, nearly triple the amount passed in 2020 (5), and average support for social proposals rose to 33% from 27%.
Georgeson also said that the number of director nominees that failed to receive at least 50% shareholder support increased from 19 in 2020 to 28 in 2021.
17 S&P 500 companies failed to receive majority support for their say-on-pay proposals in 2021, compared to 10 last year.
Elsewhere in the report, Georgeson shows that:
· Nearly 35% (43) of the 122 socially-focused proposals that went to a vote were related to political spending, with votes on workforce diversity, racial equity and human rights each accounting for approximately 10%
· There was a dramatic increase in average support for workforce diversity proposals from approximately 35% in 2020 to more than 55% in 2021. The number of submitted proposals on the subject also increased significantly to 90 in 2021 compared to 15 in 2019
· The total number of governance proposals that went to a vote increased for the second consecutive year: 246 compared to 237 in 2020 (and 221 in 2019)
· More than half of all governance proposals that went to a vote were related to written consent (69) and the board (58) (including topics such as separation of the chair and CEO roles, majority voting and board declassifications)
· The Chevedden Group was behind a larger number of proposals (252) than other groups of investors, with total submissions. 226 of their proposals related to governance
· No compensation-related shareholder proposal passed in 2021 and, similar to previous AGMs, they tended to receive relatively low support
Georgeson has collected and published statistics on corporate governance trends since 1987, the year institutional investors first sponsored shareholder proposals.
The report is available at https://www.georgeson.com/us/news-insights/annual-corporate-governance-review.