Amid Debate Over Disclosure, Early Meetings Show Mixed Support for Political Issue Proposals

Thu May 30, 2013 10:00am EDT

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Amid Debate Over Disclosure, Early Meetings Show Mixed Support for Political Issue Proposals

PR Newswire

NEW YORK, May 30, 2013 /PRNewswire/ -- As the debate continues over whether companies should be required to disclose certain information about their political spending activities to shareholders, early vote results show mixed shareholder support for political issue proposals, according to the latest Proxy Voting Fact Sheet released by The Conference Board in collaboration with FactSet Research.

The report, which examines data from more than 600 annual general meetings (AGMs) held at Russell 3000 companies between January 1 and April 30, shows that, of 28 proposals related to political issues submitted at companies that held AGMs during the period, 24 went to a vote (of the remainder, three were withdrawn and one was omitted). None of those proposals received majority support. While overall support averaged 18.3 percent of votes cast for the 24 voted proposals, support levels ranged from 2.9 percent to 39.2 percent.

"The continuing high volume of proposals on this topic suggests that, whether or not the Securities and Exchange Commission takes up rulemaking on this topic, shareholders will continue to press companies for more information about their activities in this area," says Melissa Aguilar, researcher at The Conference Board and author of the report. "While the details vary, most of the proposals that went to a vote sought some sort of annual or semiannual report on corporate spending and lobbying and corporate policy in this area."

The volume of proposals seeking details related to political spending has climbed steadily since the Supreme Court's 2010 decision in Citizens United v. Federal Election Commission, which rolled back restrictions on political spending by corporations. Among Russell 3000 companies that held AGMs during the period from January 1 to June 30, 2012, 96 such proposals were submitted, 70 of which were voted on.

"Early meeting results are revealing some interesting emerging trends, including the increased use by corporate governance activists of 14a-8 proposals targeting pay practices," says John Laide, vice president, senior product manager, FactSet Research Systems. "When mandatory say on pay went into effect in 2011, the number of compensation-related proposals submitted by shareholders dropped by nearly two-thirds. The number of pay proposals has been steadily rising and is on pace to easily surpass last year's total, and is actually only running about 25 percent less than 2010 levels. Eliminating accelerated vesting due to a change of control and requiring executives and directors to retain equity for longer periods of time are among the top pay issues."

Other findings from the current proxy season highlighted in the May edition of the Proxy Voting Fact Sheet include:

  • For the 502 Russell 3000 companies reporting detailed say-on-pay vote results during the January—April 2013 period, shareholder support as a percentage of votes cast averaged 91 percent. Of those, 496 companies passed their SOP votes, while shareholders failed to get majority support for their SOP proposals at six companies failed.
  • The vast majority of companies that held SOP votes during the period (378, or 75.3 percent) received shareholder support of 90 percent or greater.
  • At 27 companies, SOP proposals received shareholder support of less than 70 percent—the level at which companies may be subject to greater scrutiny by proxy advisory firms such as ISS and Glass Lewis.
  • The largest proportion of shareholder proposals during the January—April period related to corporate governance. Among governance-related proposals voted during the period, board declassification proposals received the highest average shareholder support (78.3 percent for the 18 proposals voted during the period). The highest volume of governance proposals voted during the period sought to split the chairman and CEO positions (21). None received majority support. On average, support for proposals was 28.8 percent in favor (as a percentage of votes cast).
  • Among the 224 shareholder proposals submitted at Russell 3000 companies the held AGMs during the period, 62.5 percent went to a vote, while nearly one-quarter (23.7 percent) were omitted. Proportions were similar for the 190 proposals submitted at S&P 500 companies that held meetings during the same period.
  • By sponsor type, most shareholder proposals submitted at Russell 3000 companies that held meetings through April 30 were filed by individuals (95).

For complete details and additional findings, download the complete report: https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2499.

About The Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501(c)(3) tax-exempt status in the United States. For more information, please visit www.conference-board.org.

About FactSet
FactSet Research Systems Inc., a leading provider of financial information and analytics, helps the world's best investment professionals outperform. More than 48,000 users stay ahead of global market trends, access extensive company and industry intelligence, and monitor performance with FactSet's desktop analytics, mobile applications, and comprehensive data feeds. FactSet's corporate governance database, SharkRepellent, provides information on takeover defense and proxy-related issues. FactSet's corporate activism database, SharkWatch, provides access to detailed activist investor profiles. The Company was named the 2012 Best Research Provider at the Inside Market Data and Inside Reference Data Awards and has been included in FORTUNE's Top 100 Best Companies to Work For, the United Kingdom's Great Places to Work, and France's Best Workplaces. FactSet is listed on the New York Stock Exchange and NASDAQ (NYSE: FDS | NASDAQ: FDS). For more information, visit www.factset.com and follow FactSet on Twitter: www.twitter.com/factset.

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