Pamela Marcogliese is partner, Elizabeth Bieber is counsel, and Sarah Ghulamhussain is a senior associate at Freshfields Bruckhaus Deringer LLP. This post is based on Freshfields memorandum by Ms. Marcogliese, Ms. Bieber, Ms. Ghulamhussain, Yunah Ko, Lauren Lee and Evelyne Kim.
The extraordinary 2022 proxy season comprised significant developments in governance, environmental and sustainability issues, shareholder engagement, investor considerations, and activism matters.
Freshfields’ corporate governance team reviewed trends and developments for this year’s proxy season, summarizing the key takeaways and guidance across the following core areas: boards and directors refreshment trends, board and senior management diversity, SEC updates, climate disclosure and engagement, environmental and social shareholder proposals, governance trends and proposals, executive compensation considerations, activism and proxy advisory firm updates and investor updates.
High-level takeaways are outlined below, and the full report can be found here. We hope this serves as a helpful benchmarking reference as you consider how your own company policies live up to evolving regulation and investor expectations.
- There was a record-breaking number of shareholder proposals for Russell 3000 companies, mostly related to ESG. However, support, including majority support, has been more modest compared to historical results, although some newer social proposals have seen significant support.
- The emergence of an ESG counterpoint has begun, including an increase in more conservative proponents pushing towards an anti-ESG focus.
- Annual management proposals were impacted by an increase in “vote-no” campaigns and a modest increase in votes against ratification of auditors.
- Climate-related proposals that receive majority support have been narrowly tailored and core to a company’s business.
- Diversity continues to be a focus, even as California courts invalidated the diversity requirements for California-headquartered companies.
- New shareholder proposal topics continue to follow societal issues and trends.
- The confluence among stakeholder groups continues, particularly between shareholders and workers; the number and breadth of shareholder proposals focused on worker rights, pay and working conditions continues to increase, as shareholders focus on social issues as well as the workforce as an asset.
- Trend towards investors de-levering voting authority; BlackRock, Vanguard, and T. Rowe Price are permitting some clients the ability to direct voting of their own shares.