One way shareholders exert influence over corporations is by introducing proposals that appear on corporate proxy ballots. To an unprecedented degree, a small subset of shareholders has been turning to this shareholder-proposal process to pursue social and political changes outside normal legislative and administrative channels. In 2016, a record percentage of shareholder proposals concerned social or policy issues, with, at most, an attenuated relationship to share value.
- For the first time, a shareholder proposal relating to increased disclosures of corporate political spending won majority support over board opposition; but the overall level of shareholder support for such proposals fell in 2016. A shareholder proposal asking Fluor to increase its disclosure of corporate spending related to politics won the backing of 52% of the company’s shareholders—the first time such a proposal won the support of a majority of shareholders at a Fortune 250 company over board opposition, dating back to 2006.
- Environmental-policy proposals have received more voting support in 2016; but most shareholders continue to vote against these proposals. A greater percentage of shareholders supported environmental-policy shareholder proposals in 2016 than in any other year dating back to 2006, though 79% of shareholders, on average, voted against environment-related shareholder proposals this year.
- Aside from shareholder proposals involving proxy access or seeking to implement shareholder majority voting rules, shareholder proposals remain very unlikely to win majority support. Apart from proxy-access shareholder proposals, only 3% of shareholder proposals received majority shareholder support; most that did sought to empower shareholder voting majorities, either by changing company bylaws so that director nominees needed to win shareholder majority support to take their seats in uncontested elections or by eliminating supermajority voting provisions from company bylaws.
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.