Editor’s note: Data on shareholder votes for America's 250 largest public companies during the 2020 proxy season can be found on the publicly available (and fully sortable) Proxy Monitor database.
Analysis by James R. Copland:
Late-April Proxy Voting Results
The unusual 2020 “virtual” proxy season is now well underway. More than 10% of the 250 largest American companies by revenues (28 companies), tracked in the Manhattan Institute’s Proxy Monitor database, held annual meetings between April 23 and 29. Of those 28 companies, 26 reported voting results by the end of April (four of which were included in last week’s proxy-voting update). Among the 22 companies reporting voting results between April 27 and 30, 14 companies faced a total of 31 shareholder proposals—led by Boeing with six shareholder proposals; Abbott Labs with four shareholder proposals; and AT&T, IBM, and Wells Fargo with three proposals each.
Unlike companies facing shareholder proposals earlier in the cycle, several companies in this period saw a shareholder proposal win majority voting support. Prior to this reporting period, 21 Proxy Monitor companies faced 33 shareholder proposals in 2020, with only one receiving majority support (a proposal at Stanley Black & Decker seeking to empower shareholders to act by written consent, reported last Tuesday). But among the 31 shareholder proposals coming to a vote at the 14 companies reporting proxy results last week, seven were supported by shareholder majorities, six over board opposition:
- Johnson & Johnson (4/23) (61% voting For): Asking for a Board Report on Opioid-Related Risks (Sponsor: Illinois State Treasurer)
- Abbott Labs (4/24) (84%): Seeking to Eliminate Supermajority Voting Rules (Sponsor: John Chevedden)
- Kellogg (4/24) (53%): Seeking to Eliminate Supermajority Voting Rules (Sponsors: James McRitchie and Myra K. Young)
- Boeing (4/27) (52%): Seeking a Policy of Splitting the Company’s Chairman and CEO Roles (Sponsor: John Chevedden)
- Genuine Parts (4/27) (74%): Asking for a Board Report on Human Capital Management Risks (Sponsor: As You Sow)
- Raytheon Technologies (4/27) (97%): Seeking to Eliminate Supermajority Voting Rules (Sponsor: John Chevedden)
- IBM (4/28) (55%): Seeking a Shareholder Right to Remove a Director by Majority Vote (Sponsors: James McRitchie and Myra K. Young)
Five of the seven proposals getting shareholder-majority support were sponsored by the “Chevedden group” corporate-gadfly investors—either Chevedden himself or his allies, the husband-wife team of James McRitchie and Myra Young. Each was a governance-related proposal.
Three of the successful gadfly-sponsored proposals sought to eliminate all supermajority voting provisions in corporate bylaws in lieu of “simple majority voting.” Although it is common for such proposals to receive majority support in precatory shareholder-proposal voting, actually executing this change typically requires a supermajority of all shares (not merely shares voting) to achieve. The Raytheon proposal received more than 97% support, after the company’s board declined to take a position for or against the proposal; but as the company explained on its proxy statement, changing its supermajority voting rules would require a vote of 80% of all outstanding shares. Given the significant percentage of shares not voting, that’s a high threshold—one that would not be reached even with the overwhelming 97% support of all shareholders who voted on this non-binding proposal.
Another proposal by Chevedden to receive majority shareholder support asked the Boeing board to adopt a formal policy separating its chairman and CEO roles. The proposal, even if adopted, would create no change in Boeing’s current management structure: the company’s current chairman is an independent director, Larry Kellner, the former CEO of Continental Airlines. The final Chevedden Group proposal to win majority shareholder backing, by McRitchie and Young at IBM, asked the board to take steps to permit a majority of shareholders to remove a director, without cause, between the company’s annual meetings.
Beyond those gadfly-investor proposals that won shareholder majority voting support, a proposal at Kimberly Clark by Myra Young narrowly missed winning a shareholder majority, with 49.2% support. Two other governance-related proposals filed by the Chevedden Group gadflies at IBM also received more than 40% support: a written-consent proposal, sponsored by Chevedden; and a proposal to split the chairman and CEO, sponsored by Kenneth Steiner.
Two shareholder proposals relating to social issues also received majority shareholder votes in this reporting period: a proposal at Johnson & Johnson, sponsored by the Illinois State Treasurer, which sought a board report on its opioid-related risks; and a proposal at Genuine Parts, sponsored by the social-investing umbrella group As You Sow, which asked the company to make various disclosures related to what the proposal calls “human-capital risks.” (Greater disclosures of workforce data, as discussed in As You Sow’s proxy submission, have been advocated in recent years by various social-issue and labor advocates, and the subject of some recent policy debate. I shared my thoughts on such disclosures last spring, before the House Financial Services Committee.) One other social-related shareholder proposal received more than 40% voting support: a proposal at Honeywell, sponsored by the Catholic-affiliated Mercy Investment Services, which asked for further corporate lobbying-related disclosures.
The late-April shareholder-voting results may augur a substantially increased likelihood of shareholder support for at least some classes of shareholder proposal in the unusual 2020 proxy season. To date, 13% of all shareholder proposals coming to a vote in 2020 have received shareholder-majority support—more than double the percentage in all of 2019 (6%), and higher than any year since 2009 and 2010 (15%, 13%). (If we exclude the proposal at Raytheon, which was unopposed by the board, the shareholder-majority percentage drops to 11%.) As a general rule, shareholders tend to be less likely to support company management in shareholder-proposal voting during bear markets; and the unique circumstances of the Covid-19 response may be impacting proxy solicitation in this cycle.
In addition, the majority support for two social-issue-related proposals continues a recent trend, in which some small number of such proposals are able to win the support of shareholder majorities. Before the last few years, majority voting support for shareholder proposals related to social issues was exceedingly rare, absent board support.
To see the all vote results from the 2020 proxy season and learn more, visit Proxy Monitor.
The AES Corporation (AES)
4/23/20 Annual Meeting
Abstentions are included
Voting Results:
Item 4 – Allow Shareholders to Vote on Bylaw and Charter Amendments (J. Chevedden) – 17.50% Voting in Favor
Johnson & Johnson (JNJ)
4/23/20 Annual Meeting
Abstentions are not included
Voting Results:
Item 5 – Independent Board Chair (Trillium Asset Mgmt.) – 41.82% Voting in Favor
Item 6 – Report on Governance of Opioids-Related Risks (Illinois State Treasurer's Office) – 60.92% Voting in Favor
Abbott Laboratories (ABT)
4/24/20 Annual Meeting
Abstentions are included
Voting Results:
Item 4 – GAAP Financial Perf. Metrics Disclosure (Vermont Pension Investment Committee) – 30.76% Voting in Favor
Item 6 – Let Shareholders Vote on Bylaw Amendments (K. Steiner) – 2.38%% Voting in Favor
Item 7 – Simple Majority Vote (J. Chevedden) – 84.48% Voting in Favor
AT&T Inc. (T)
4/24/20 Annual Meeting
Abstentions are not included
Voting Results:
Item 4 – Independent Board Chair (Undisclosed proponent)– 40.15% Voting in Favor
Item 5 – Employee Representative Director (Undisclosed proponent) – 7.64% Voting in Favor
Item 6 – Improve Guiding Principles of Executive Compensation (Undisclosed proponent) – 8.72% Voting in Favor
Kellogg Company (K)
4/24/20 Annual Meeting
Abstentions are included
Voting Results:
Item 6 – Adopt Simple Majority Vote (J. McRitchie & M. Young) – 52.58% Voting in Favor
L3Harris Technologies, Inc. (LHX)
4/24/20 Annual Meeting
Abstentions are included
Voting Results
Item 7 – Right to Act by Written Consent – (J. Chevedden) – proponent did not appear to present proposal; no vote reported
The Boeing Co. (BA)
4/27/20 Annual Meeting
Abstentions are included
Voting Results:
Item 4 – True Diversity Board Policy (Undisclosed proponent) – 13.02% Voting in Favor
Item 5 – Report on Lobbying (The Province of Saint Joseph of the Capuchin Order & co-filers) – 30.79% Voting in Favor
Item 6 – Independent Board Chairman (J. Chevedden) – 52.14% Voting in Favor
Item 7 – Right to Act by Written Consent (Undisclosed proponent) – 43.35% Voting in Favor
Item 8 – Mandatory Retention of Significant Stock by Executives (Undisclosed proponent) -25.98% Voting in Favor
Item 9 – Disclose Adjustments to Compensation Performance Metrics (Undisclosed proponent) – 25.39% Voting in Favor
Genuine Parts Company (GPC)
4/27/20 Annual Meeting
Abstentions are included
Voting Results:
Item 4 – Human Capital Management Disclosure (As You Sow) – 74.45% Voting in Favor
Honeywell International Inc. (HON)
4/27/20 Annual Meeting
Abstentions are included
Voting Results:
Item 4 – Let Shareholders Vote on Bylaw Amendments (J. Chevedden) – 4.53% Voting in Favor
Item 5 – Report on Lobbying (Mercy Investment Services & co-filer) – 45.64% Voting in Favor
Raytheon Technologies Corp. (RTX) (merger of United Technologies Corp. & Raytheon Co.)
4/27/20 Annual Meeting
Abstentions are not included
Voting Results:
Item 4 – Simple Majority Voting (J. Chevedden) – 97.28% Voting in Favor* (Board did not make a recommendation to vote For or Against this proposal)
Item 5 – Report on Facilities Closure Impact on Communities (United Steelworkers & co-filer) – 5.38% Voting in Favor
International Business Machines Corp. (IBM)
4/28/20 Annual Meeting
Abstentions are not included
Voting Results:
Item 4 – Shareholder Right to Remove Directors (J. McRitchie & M. Young) – 54.50% Voting in Favor
Item 5 – ight to Act by Written Consent (J. Chevedden) – 42.20% Voting in Favor
Item 6 – Independent Board Chair (K. Steiner) – 43.30% Voting in Favor
Truist Financial Corporation (TFC) merger of BB&T Corp. & SunTrust Banks, Inc.
4/28/20 Annual Meeting
Abstentions are not included
Voting Results:
Item 4 – Independent Board Chair (K. Steiner) – 44.87% Voting in Favor
Wells Fargo & Co. (WFC)
4/28/20 Annual Meeting
Abstentions are included
Voting Results:
Item 4 – Let Shareholders Vote on Bylaw Amendments (J. Chevedden) – 3.22% Voting in Favor
Item 5 – Report on Incentive-Based Compensation & Risks of Material Losses (NYS Common Ret. Fund) – 23.07% Voting in Favor
Item 6 – Report on Global Median Gender/Racial Pay Gap (Arjuna Capital) – 9.00% Voting in Favor
Kimberly-Clark Corp. (KMB)
4/29/20 Annual Meeting
Abstentions are included
Voting Results:
Item 4 – Right to Act by Written Consent (M. Young) – 49.20% Voting in Favor