Despite fireworks early in the year, Say on Pay voting results ultimately retreated toward the mean by the end of the 2021 proxy season, according to Freshfields’
2021 proxy season review:
- Average support for S&P 500 say-on-pay proposals over the last five years has declined from 92.3% in 2016 to 88.2% in 2021.
- The average decline in vote support if ISS recommended against a say-on-pay proposal was 33% (historic levels were between 24-32%).
- 17 S&P 500 companies received between 50% and 65% support while 13 failed.
The proxy season also provides an in-depth look at shareholder proposal data and highlights how many proposals were withdrawn (i.e., the company and investor were able to come to an agreement).
- 46 proposals asked for EEO-1 data
- 3 went to a vote, 2 passed (>80%)
- 39 withdrawn after negotiation
- 37 proposals to report on D&I efforts
- 9 were taken to a vote, 4 passed
- 19 withdrawn after negotiation
- 30 proposals asked for a board diversity policy or report
- Of the 3 voted on, all passed with greater than 70% support
- 9 proposals requested plans to improve management diversity
- 1 was voted on and passed (75% support)
- 8 were withdrawn after negotiation
With such an active shareholder proposal agenda, there seems even less necessity for SEC rules on climate metrics and required HCM disclosures – and in fact, the passage of such rules could result in a decline in shareholder proposals in 2022. However, in the medium term, activist shareholders may push harder on linking incentives to ESG performance, especially if initial disclosures do not show notable improvements in areas such as diversity or greenhouse gas emissions.
