Activist investors are putting even more pressure on the biggest public companies this year through proxy ballots, according to the latest data. The data also indicates that they’re getting more support from their fellow shareholders this year.
Proxy season close to end
The Manhattan Institute has released its mid-season Proxy Monitor report, which indicates that Fortune 250 companies received an average of 1.39 shareholder proposals on their proxy ballots. The data covers the 211 companies that held their annual meetings on or before May 27. The number is meaningfully higher than the 1.22 proposals the companies received in the same time frame last year. (All graphs in this article are courtesy Proxy Monitor.)
As the graph above shows, the number of shareholder proposals received so far this proxy season is the highest it has been in 2010. That’s the year Congress passed the Dodd-Frank Act, which mandated that public companies in the U.S. have shareholder votes on their directors annually, biennially or triennially. That new requirement made shareholder proposals asking for advisory voting rights obsolete.
Shareholders supporting activist investors
This year’s proxy season also brought about a lot more support for activists from other shareholders. The Manhattan Institute reports that 12% of shareholder proposals received majority shareholder support, compared to only 4% last year. Once again, this is the highest percentage since 2010 when the Dodd-Frank Act was introduced.
Activist investors now seeking proxy access
According to the Proxy Monitor, this year’s surge in shareholder proposals is mostly as a result of a significant increase in the number of proposals seeking proxy access. In fact, the number of this type of proposal more than tripled, with 32 of them being introduced this year compared to last year’s ten in the whole year.
The reason for this is again related to the significant increase in the number of proposals seeking proxy access, according to the Proxy Monitor. The Manhattan Institute found that proxy access proposals received mixed support early in this year’s proxy season and in the preseason period as well. During the month of May, however, the tides turned and these types of shareholder proposals became more likely to receive support from a majority of shareholders.
Shareholders less likely to support other proposals
Not counting proposals seeking proxy access, the firm reports that just 3.5% of proposals received the support of a shareholder majority. That’s lower than the level recorded last year and in any of the ten years since the Proxy Monitor started keeping records.
So far this year only seven proposals that were not seeking proxy access received majority votes. Of them, two were seeking declassification of the company’s board and annual elections of all directors. Two sought to strip supermajority voting requirements from the company’s bylaws, and two sought to give shareholders the power to call special meetings outside the annual meeting. The final proposal sought to separate the CEO and chairman roles at a company.
Shareholder proposals by type
So far this year, 44% of all the proposals brought were related to corporate governance issues. This category includes issues like separating the CEO and chairman roles and proxy access. The Proxy Monitor found that 42% of the proposals dealt with social or policy issues, while 14% dealt with executive compensation.
