SCROLL
DOWN
2020
Proxy Season
Review
This edition of ProxyPulse provides insights into key corporate governance and shareholder voting data for the 2020 proxy season and related trends. It covers the results of 3,844 public company annual meetings held between January 1 and June 30, 2020.
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The COVID-19 pandemic had a profound impact on the locations of shareholder meetings during the US 2020 proxy season. Most companies were forced to shift from in-person annual meetings to virtual-only or hybrid meetings. The number of virtual shareholder meetings (VSMs) increased from 248 in 2019 to 1,494 in 2020, and accounted for 39% of all meetings held during the season.
The number of virtual shareholder
meetings (VSMs) increased from
248 in 2019 to 1,494 in 2020,
and accounted for 39% of all
meetings held during the season.
Overview & Key Takeaways
VSMs with shareholder proposals had greater attendance and voting, the shareholders asked more questions and the meetings lasted nearly twice as long.
INVESTOR DEVELOPMENTS: ESG
Many institutional investors reiterated the need for companies to consider ESG risk, including a heightened focus on ESG disclosures and standardized frameworks for evaluation of risks and practices.
COVID-19 AND THE SPIKE IN VIRTUAL SHAREHOLDER MEETINGS
The COVID-19 pandemic had companies, proxy advisors and investors pivoting towards Virtual Shareholder Meetings to avoid in-person gatherings. Companies and their Shareholders used VSMs differently depending on whether the meeting was routine or had shareholder proposals.
VSMs WITH
SHAREHOLDER
PROPOSALS
VSMs WITHOUT
SHAREHOLDER
PROPOSALS
193
1,301
146
37
14
2
19
2
34
18
Number of attendees
Meeting duration
Number of shareholders that voted on proxy items
(versus voting in advance)
Number of
shareholders questions
Shareholder
proposal rules
New thresholds
PREVIOUS RULES
$2,000
or 1%
ONE
YEAR
#1
#2
#3
three
years
TWO
years
ONE
year
$2,000
$15,000
$25,000
Minimum value
of shares held
Minimum period
of time shares held
SEC AMENDS SHAREHOLDER PROPOSAL RULES
In September 2020, the SEC adopted amendments to the shareholder proposal rule (14a-8), including changes to the eligibility requirements for submitting proposals.
TM
1
Share Ownership
Institutional ownership of public company shares increased
slightly from 70% in 2019 to 71% in 2020. Retail ownership of public company shares declined to 29% in 2020 from 30% in 2019.
Retail/Institutional Share Ownership Composition
2016
2017
2019
2020
2018
30
%
29
%
30
%
30
%
29
%
70
%
71
%
71
%
70
%
70
%
INSTITUTIONAL
RETAIL
%
%
2
Shareholder Voting
As a group, institutional investors voted 92% of the shares they held during the 2020 season, up from 90% in 2019. Voting by retail shareholders held steady at 28% of the shares they own.
2016
0%
30%
90%
100%
2017
2018
2019
2020
28
%
29
%
28
%
28
%
28
91
%
91
%
91
%
92
90
%
participation
INSTITUTIONAL
percentage of shares voted
RETAIL
Number of directors failing to receive support
<50% SUPPORT
<70% SUPPORT
2016
2017
2018
2019
2020
382
3
Director Elections
On average, shareholder support for directors held steady at 95%. However, 453 directors failed to attain majority support.
374
416
478
453
1,304
1,239
1,408
1,726
1,569
A total of 21,358 directors stood for election this season.
say-on-pay
percentage of shares voted “FOR”
2016
2017
2018
2019
2020
4
Say-on-Pay
During this season, 107 say-on-pay proposals failed to receive majority shareholder support overall, a decrease from 124 in 2019. A closer look at the data shows that low say-on-pay support correlates to low director support.
89
%
89
%
89
%
88
%
87
%
PROPOSALS
107
<50% support
at least 1
director
36
at least 1
director
121
303
PROPOSALS
<70% support
5
Shareholder Proposals
Overall average support for the 440 shareholder proposals submitted to a vote in 2020 was up slightly — from 29% of shares voted in favor in 2019 to 30% in 2020. There were changes in the types of shareholder proposals and their support levels varied.
social/Environmental proposals
percentage of overall shares voted “FOR”
2016
2017
2018
2019
2020
20
%
25
%
27
%
25
%
27
%
corporate political spending proposals
percentage of overall shares voted “FOR”
2016
2017
2018
2019
2020
22
%
25
%
28
%
31
%
36
%
NUMBERS BASED ON AVERAGES
minutes
minutes