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Trends in Shareholder Voting

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April 12, 2018 | Jennifer Namazi

Trends in Shareholder Voting

In a blog last week, I covered this proxy season's hot topic - the CEO Pay Ratio disclosures. While that phrase has been a buzz one of late, there are other items to keep tabs on this proxy season. In today's blog, we'll explore some of the interesting trends around shareholder voting this year. 

The Good Trend

Semler Brossy put out a report on the 2018 Say on Pay and Proxy Results for Russell 3000 companies. The report says that of the Russell 3000 companies evaluated as of that time, virtually none failed to pass an equity plan proposal this year. In addition, it looks like equity plans are not just receiving a passing vote, they are receiving strong shareholder support:
  • 73% of equity proposals in 2018 have received vote support above 90%, the highest rate over the past eight years 
  • The difference in vote results for proposals receiving a “For” versus an “Against” ISS recommendation (20%) is higher in 2018 than in the previous eight years
Of course, only a portion of the season's equity plan proposals are included in this analysis (41 proposals), since at the time of publication we weren't through with proxy season, but it still looks to be a favorable season for equity plan proposals. 

The Meh Trend

I won't go so far as to call this bad news, but out of analyzed companies in the Russell 3000, five of them (3.9%) so far have failed their Say-on-Pay vote this year. While that may seem like a small number, and proxy season still isn't over, it does mark the highest failure rate for Say-on-Pay since voting began in 2011. Semler Brossy suggest this is a trend to watch, and "could be an early indication of lower average support across the board and increased alignment of institutional shareholder voting with ISS recommendations."

It will be interesting to see whether these trends continue as proxy season progresses.  Any new and exciting observations will be reported here in the NASPP Blog. 

-Jennifer

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