October 10, 2018

Survey Results: Political Spending Oversight

As I blogged today in this “Proxy Season Blog,” shareholder support of corporate political spending proposals increased to 28% this year – which is an 8% increase since 2014. With that in mind, here are results from our recent survey on political spending oversight:

1. Oversight of our company’s political spending is conducted by:

– Full board – 13%
– Board committee – 58%
– Committee consisting only of management – 8%
– Individual officer – 17%
– Other – 4%

2. For those overseeing political spending, the type of information they get regarding actual contributions is organized by:

– Individual contributions – 38%
– Particular contributions (e.g. sensitive races or large amounts) – 0%
– Aggregate breakdown (e.g. total annual amount, amount by type of election, political party breakdowns, etc.) – 46%
– No information is provided about actual contributions – 17%

3. If the board or a board committee is involved, their role is primarily:

– Ensure the process is sound from a governance perspective – 55%
– Ensure there is a process & that it’s followed – 36%
– Provide input on the amount or type of contributions – 0%
– Maximize the likelihood that contributions will be consistent with the company’s mission – 9%

Please take a moment to participate anonymously in these surveys:

– “Quick Survey on Board Portals
– “Quick Survey on Board Fees for CEO Search

Proxy Access: Resistance is Futile?

We haven’t heard as much about proxy access this year. But it’s covered on page 38 of this 110-page report from Shearman & Sterling – which has lots of interesting info about governance provisions & disclosure, executive pay and proxy season trends.

As many have discovered first-hand, it’s an uphill battle to resist shareholder requests to implement proxy access: 90% of companies that received “adopt” proposals in 2015-2018 ended up doing so. And although there’s been a big drop in the number of these proposals, that’s partly because 67% of the S&P 500 and 89 of the largest 100 companies now have a proxy access bylaw in place. Here are some other stats:

– 53 companies adopted proxy access during the 2018 proxy season – compared to 87 during 2017

– Only 22 “adopt” proposals were received this season compared to 100 last year – due to a greater number of companies choosing to voluntarily adopt proxy access and shareholders switching their focus from “adopt” to “fix-it” proposals

– Only 28 “fix-it” proposals were received this season compared to 64 last year – but shareholders continue to advocate for changes to details in proxy access bylaws, as well as restrictions on the shareholder aggregation cap, renominations and the percentage of directors electable via proxy access

– From 2016-2018, only 2 of 103 “fix-it” proposals passed – and those were at companies that used a 5% minimum percentage ownership threshold. However, 37 companies have amended their proxy access bylaws during that time period – which might suggest behind-the-scenes pressure.

– More than 900 meetings have been held by companies with a proxy access bylaw since 2011. Only 1 nomination has been attempted using proxy access – and zero proxy access candidates have ultimately appeared in a company proxy statement

Transcript: “Nasdaq Speaks”

We have posted the transcript for our recent webcast: “Nasdaq Speaks – Latest Developments & Interpretations.”

Liz Dunshee