Proxy Season Preview: Shareholder Activism en Marche

In the first quarter of 2017, 28 of America’s 250 largest publicly traded companies by revenues, as ranked by Fortune magazine, held their annual meetings. Twelve more will have met through April 23—followed by 32 more in the last week of April. By June 15, most of America’s 250 largest publicly traded companies will have met to conduct their business.

This report gives a final review of shareholder-proposal activism in the 2016 proxy season and previews the 2017 season. Empirical evidence is based on data in the Manhattan Institute’s Proxy Monitor database, available online at ProxyMonitor.org, which catalogs shareholder proposals submitted to the 250 largest U.S. publicly traded companies.

• A very small number of shareholders sponsor most shareholder proposals. In 2017, three shareholders—John Chevedden, Kenneth Steiner, and James McRitchie—have sponsored more than one-third of all shareholder proposals.
• Most shareholders are not engaged in shareholder-proposal activism. In 2016 and 2017 to date, no institutional investor has sponsored a shareholder proposal, except for those affiliated with a labor union or public-employee pension plan or those with a social-investing, public-policy, or religious purpose. Such institutional investors have sponsored only 1% of all shareholder proposals dating back to 2006.
• Shareholder activism related to social and policy concerns is up. In 2016, a majority of all shareholder proposals involved social or policy concerns with an attenuated connection to share value.
• Most large publicly traded companies are adopting proxy access, but they have some scope in how to structure these rules. Following a substantial shareholder-proposal effort by the New York City pension funds to prod companies to adopt “proxy access”—allowing shareholders holding a certain fraction of company stock for a certain period to place director nominees on company proxy ballots—most large companies are responding to shareholder sentiment and adopting proxy-access rules. However, companies have been able to adopt rules that are less permissive than those sought by some shareholder activists. In 2017, multiple shareholder proposals seeking to adopt more permissive standards than those selected by the company have been introduced, thus far without attracting majority shareholder support.
• No shareholder proposal has received majority support to date in 2017. Among the 28 Fortune 250 companies holding annual meetings in the first quarter of 2017, none has seen a shareholder proposal receive majority shareholder support.

REPORT AT PROXYMONITOR.ORG

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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.

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.