2013 Executive Compensation Shareholder Proposals Continue to Focus on Equity Acceleration, Retention

July 25, 2013

A recent update on the status of shareholder resolutions during the 2013 proxy season by Amy Gibson and her colleagues at Gibson, Dunn and Crutcher shows that as of July 9, shareholder proposals had increased by more than 10 percent over 2012 and that limitations on the accelerated vesting of equity awards had moved into the top five most common proposals submitted.  According to the Gibson Dunn update, in 2013. 820 shareholder proposals have been submitted so far this year compared to 739 in all of 2012, and the SEC was slightly less likely to exclude shareholder proposals than in 2012. 

With respect to the most frequent executive compensation resolutions, consistent with trends we reported earlier this year:

  • 45 proposals were submitted seeking to limit the accelerated vesting of equity awards, and of the 27 were actually voted on averaged over 33% support of votes cast. Several companies were successful in arguing for exclusion on these proposals on the basis that they conflicted with their equity plans.
  • 34 executive stock retention proposals were voted on and receiving an average of 24.4% support.
  • At least 22 companies received a triennial say on pay proposal by the United Brotherhood of Carpenters and Joiners asking the company to hold a say on pay vote every three years with separate votes on the company's overall compensation plan, the annual incentive plan, the long-term incentive plan, and post-employment compensation. These proposals were withdrawn by the Carpenters who stated they were doing so in recognition that there was little interest in the proposal at the time.

Although the accelerated vesting and stock retention proposals received in excess of 40% support in some cases, neither experienced majority support. 

The update also details results of significant governance-related shareholder proposals such as political spending disclosures, which again was the most common shareholder resolution in 2013 and independent chair proposals, as well as the success of companies in asking the SEC to exclude shareholder resolutions.