2022 Trends in Shareholder Proposals

Shareholder proposal activity hit record highs this year, according to a new comprehensive analysis by Alliance Advisors. However, this bolder approach may have resulted in “too much overreach, delivering a patchwork of results” based on overall levels of support. Highlights of the report include:

• E&S continues to be the most popular category of shareholder proposals (20% up this year, to 564 out of a total of 952) while compensation-related proposals are down to only 81 this year.
  
  
• Board and workforce diversity (EEO-1) proposals were down this year, no doubt due to a shift in practice rendering them unnecessary. Popular proposals in 2022 included:
  
  
  1. Racial justice reporting audit proposals tripled this year with an average 45% support and eight majorities. ISS backed the majority (77%) which contributed to the high success rates while BlackRock and Vanguard rejected several proposals due to already high levels of D&I disclosure at target companies. More than 15 companies negotiated the withdrawal of the proposal by publicly announcing their intention to complete an audit, thus avoiding a vote. The report notes that most of these audits are undertaken by two firm (Covington & Burling and civil rights attorney Laura Murphy) and can cost up to $1 million, bringing overall utility into question.
     
     
  2. Sexual harassment and concealment (arbitration, non-disclosure and non-disparagement agreements) proposals more than doubled this year, with 5 majorities.
     
     
  3. Climate change proposals also more than doubled but met with less support than social proposals – only 23% won majorities, and half of those were Board-supported. BlackRock famously highlighted their reasons for supporting fewer climate proposals this year, including that many of them were too aggressive, such as calling for ceasing funding to fossil fuel companies or directing climate lobbying and political spend.
     
     
  4. Pay equity proposals, largely generated by Arjuna Capital and Proxy Impact, had good success this year with average 43% support and several majorities and withdrawals. The proposals called for unadjusted gender and racial median pay gaps in the US.
     
     
  5. Other relatively successful, though limited, proposals included those on 10b5-1 plans, clawback policies, and preventing pharmaceutical companies from excluding the impact of opioid-related litigation charges from incentive plan metrics.

Next year, look out for an increase in proposals on reproductive rights and other human rights initiatives as well as a continuation of campaigns on racial equity and drug pricing.