Activists, including those motivated principally by social or political agendas, have long used the shareholder-proposal process at the meetings of publicly traded corporations. Under rules promulgated by the Securities and Exchange Commission, such companies must include shareholder proposals on their proxy ballots for consideration by all shareholders if the proposals conform to certain procedural and substantive requirements.
In 2017, several mutual fund companies—among them BlackRock and State Street, the world’s largest and third-largest institutional investors—announced partial agreement with such social activists regarding at least the issues of gender diversity on boards and climate change. For the first time in the 12 years covered by the Proxy Monitor database, two climate-change-related shareholder proposals received majority shareholder support at a Fortune 250 company over board opposition, at ExxonMobil and Occidental Petroleum.
This report reviews the 2017 proxy season to shed light on these trends. It finds:
- The average company faced 1.24 shareholder proposals on its proxy ballot, down from 1.26 last year and 1.32 in 2015.
- Only 5% of shareholder proposals received the support of a majority of shareholders—down from 7% last year and 11% in 2015.
- A limited group of shareholders has submitted the overwhelming majority of shareholder proposals. Just three individuals and their family members sponsored 25% of all proposals.
- Proposals related to social or policy concerns with a limited relationship to share value constituted 56% of all shareholder proposals in 2017.
James R. Copland is a senior fellow and director of legal policy at the Manhattan Institute. Margaret M. O'Keefe is the project manager for Proxy Monitor.
Proxy Monitor is a project sponsored by the Manhattan Institute. It aims to shed light on the influence of outside shareholder proposals on publicly traded corporations.