The Latest Proxy Season Stats (& Expectations for ’25)

Related to today’s webcast – “Hot Governance and Engagement Proxy Tips You Need to Know” – courtesy of Steve Pantina of Proxy Analytics, here are 2024 proxy season stats through the end of November:

2024 Shareholder Proposal Stats

• Submitted Proposals:
  • 147 shareholder proposals tracked as submitted to Russell 3000 companies.
  • 104 Environmental/Social proposals (~71%), a higher proportion than the same time last year.
  • 13 proposals (9%) submitted by anti-ESG proponents, proportionately lower than during the 2024 season (11%).
• Voting:
  • Proposals voted: 40 vs. 46 at the same time last year.
  • Average support: 26.4% vs. 28.1% same time last year and 22.9% for the whole 2024 season.
  • E&S proposal support: 22.3% vs. 29.6% same time last year and 16.3% for the whole 2024 season.
  • Majority-supported proposals: 3 vs. 6 at the same time last year.  All governance proposals to date.
• 14a-8 No-Action Letters Activity:
  • 37 letters submitted attributable to the 2025 season (33 by Russell 3000 companies).
  • 10 responses to date:
    • 9 granted.
    • 1 denied.
  • 25 letters pending, 2 withdrawn.
  • Of granted requests:
    • Rule 14a-8(i)(7): 7 grants.
      • 55% for “seeks to micromanage” (vs. 23% in 2023 and 45% in 2024).
      • 45% for “relates to ordinary business” (vs. 77% in 2023 and 55% in 2024).
    • Rule 14a-8(b)/(f): 2 grants.
• Other Notes:
  • No binding bylaw proposals tracked this season.

Expectations for the 2025 Season

• Proposal Submissions:
  • Record-breaking numbers of proposals submitted and voted on for at least the past four seasons.
  • Last year, E&S proposal submissions by traditional proponents declined. The record was driven by an increase in anti-ESG proposals and unexpected submissions.
  • A marginal decline is expected this season; hard to quantify but probably less than 10%.
• Proposal Support:
  • Expecting slight uptick in support, but no major changes.
  • Big Three support for E&S proposals continued to decline:
    • Vanguard supported 0% of E&S proposals.
• Rise in AI-Related Proposals:
  • Anticipate increases in both the volume and variety of AI-focused proposals.
  • Topics likely to include: AI risks, Integration into operations, board oversight.
    • Issues like generative AI, algorithm bias, and workforce displacement.
• More Targeted Proposals:
  • Major criticisms from investors about proposals lacking materiality or targeting already addressing material risk
  • Expect some investors will address material issues more effectively, avoiding topics companies have already addressed.
  • Accountability Board initiatives may reflect this trend.
• Higher Support for Anti-ESG Proposals:
  • Growing push from investors to assess proposals on their merits, regardless of proponent.
  • Outcomes will depend on the language in resolved clauses and supporting statements.
  • No major increases expected, but case-by-case higher support is anticipated.
  • Notable: NLPC press release highlighting GLC’s support for their AI proposal at Microsoft.
• New Proposals to Watch:
  • Proposals targeting companies that miss climate targets.

Investor Guidelines

• Glass Lewis Updates for 2025:
  • AI Oversight:
    • Glass Lewis expects companies using AI to disclose the board’s role in overseeing AI-related issues.
    • While no recommendations will be based solely on AI oversight in the absence of incidents, Glass Lewis may recommend against directors if insufficient oversight leads to shareholder harm.
  • Board Responsiveness to Shareholder Proposals:
    • For proposals receiving significant support (30%-49%), Glass Lewis expects boards to engage with shareholders and provide transparent disclosures.
    • Emphasis on responsiveness, even when proposals do not achieve majority support.
• General Investor Trends:
  • No wholesale changes expected in investor guidelines.
  • Market trends show fewer “hard” DE&I targets and metrics, likely reflected in investor policies.
    • Companies may discuss board diversity more opaquely without changing practices.
  • Continued focus on director time commitments, with more updates expected in this area.

Growing Divide Between Voting and Engagement

• Engagement Trends:
  • Engagement season is active, with robust discussions on E&S initiatives despite declining support for proposals.
  • Increasing integration of investment and stewardship teams in engagement calls.
    • Sustainability teams are more integrated with investment teams and modeling processes.
• Engagement Preparation:
  • Tailor preparation to the audience:
    • Identify the type of investor (active/passive).
    • Request a participant list.
    • Research participants’ roles within the organization.

Authored by

Broc Romanek

Cooley