Tuesday, November 13, 2018

Social Issues Come Up Big in 2018 Proxy Season

In evaluating shareholder proposals from this past 2018 proxy season, it is clear that social and environmental issues dominated proxy cards this year.  While social and environmental issues made up more than 50% of shareholder proposal submissions, corporate governance and board diversity were also top of mind for shareholder's submitting proposals.  Evidence indicates that social and environmental concerns are finding support among fellow shareholders with many winning shareholder support and other proposals being withdrawn based on management concessions to those shareholder's proposing action.  Pensions & Investments reports:

"According to Institutional Shareholder Services' Voting Analytics database, environmental and social concerns accounted for just more than half of shareholder proposals submitted at U.S. companies for the 2018 season, but with an increase in the number of withdrawn proposals and proposals receiving majority support."

Climate-change related proposals have won majority shareholder support at companies like Exxon-Mobile and Occidental Petroleum, while shareholder proposals have been withdrawn at Chesapeake Energy Corp., Dominion Energy Corp. and DTE Energy Co., following company concessions to enhance their climate related disclosures. 

Other social concern proposals have centered on gun violence and the opioid crisis.  Successful shareholder proposals that won a majority of support from shareholders in 2018 included "68% of Sturm Ruger & Co. shareholder votes supported a proposal calling on the gun manufacturer to report on its efforts to make guns safer and mitigate gun violence. Gun safety proposals filed at Sturm Ruger in 2001 and 2002 were supported by 5.43% and 4.26% of investors, respectively.  The same month, 61% of Depomed Inc. investors supported a shareholder proposal from the Investors for Opioid Accountability coalition calling on the pharmaceutical company to report on how it is responding to the opioid crisis."

Finally, Facebook, Alphabet, Amazon, Netflix, Tesla and others have faced shareholder scrutiny for lack of boardroom diversity, lack of board chair independence, gender pay disparities, and other issues through the form of shareholder proposals.  Some of these proposals have found receptive corporate leadership audiences as "[t]here were some tangible changes following the companies' May meetings — Amazon and Facebook adopted formal policies to consider diversity when filling vacant director positions and Facebook expanded the risk oversight duties of its audit committee." 

Proxy season 2018 has been interesting indeed.



hat tip to Tadarious Hawkins, 3L, University of Arkansas at Little Rock William H. Bowen School of Law

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