Shareholder proposals related to compensation, environmental, and independent chairs are among the most common for which companies have asked the SEC to take no action this proxy season, according to NYSE Governance Services.
As of February 28, the SEC has received 167 no-action requests from companies seeking to omit specific shareholder proposals from the proxy statement. Compensation-related proposals lead the way with 28, followed by environmental proposals with 17, and independent chair proposals with 15. The SEC accepted 84 of the requests and denied 41. The others were withdrawn.
Two other topics getting attention this proxy season are board diversity and board declassification. So far, institutional investors have filed proposals with 20 companies that have no women on their boards, according to the 30 Percent Coalition, an investor group led by representatives of California State Teachers Retirement System (CalSTRS) and Walden Asset Management. Those proposals call for charter amendments that would institute a practice to include women and minority directors on those companies’ boards.
Last year, 72 percent of 25 diversity resolutions never went to a vote because the parties reached an agreement before the annual meeting, according to the 30 Percent Coalition, which seeks 30 percent female representation on boards by 2015.
As for declassification, so far in the 2014 proxy season, more than two-thirds of 31 large companies with classified boards that have received shareholder proposals have agreed to bring management declassification proposals to vote at the annual shareholders’ meeting, according to the Shareholder Rights Project. Over the past three proxy seasons, more than 100 companies have entered into similar agreements.
A Report on Senior Executive Succession Planning and Talent Development by The Institute of Executive Development and the Rock Center for Corporate Governance at Stanford University concludes that a majority of executives interviewed think their organizations are not doing enough to prepare for changes in leadership.
“The corporate leaders we interviewed all believe that succession is vitally important today, just as it has been in the past”, said Professor David Larcker of the Stanford Graduate School of Business. “Still, the majority [of executives] do not think that their organizations are doing enough to prepare for eventual changes in leadership at the CEO and C-suite levels, nor are they confident that they have the right practices in place to be sure of identifying the best leaders for tomorrow."
The report is based on in-depth interviews with executives and directors at 20 companies. These interviews were conducted in fall 2013. Key findings as stated in the report include:
In addition to including viewpoints from sitting directors, the report offers some suggested actions boards could take to improve succession planning. Those actions offered by Prof. Larcker and Scott Saslow, founder and CEO of The Institute of Executive Development, include:
The Conference Board Task Force on Corporate/Investor Engagement has released its first report. This follows the recently released Shareholder Director Exchange (SDX) Protocol. [Read BoardroomDirect February 2014: Issues in brief for more information about the Protocol.]
The Conference Board report concludes that fixing corporate governance – and, ultimately, restoring trust in business – calls for an open, yet purpose-driven process of reestablishing alignment between corporate strategy and investor interests.
The task force was formed to answer three questions: What is the optimal balance in the relative roles of management, directors, and investors in the governance of public corporations? What are the gaps between an optimally balanced system and the current system? How should public corporations and investors engage with one another to lead to an optimally balanced system?
“Corporations and their investors have an important role to play in helping to restore trust in business,” said Pat Russo, co-chair of the task force and director at Alcoa, General Motors, Hewlett Packard, and Merck. “That’s why the task force was assembled and why, after extensive investigation and debate, we developed this set of recommendations as a first step in aligning the interests of investors and the companies they invest in to stimulate economic growth and prosperity.”
The task force worked with an advisory board of leaders in corporate governance from the corporate, investor, and academic worlds, including Kayla Gillan, Leader of PwC’s Investor Resource Institute. The Report is a comprehensive discussion of the need for a strategic approach to engagement and how to carry it out. The findings address and include:
For more information on board-shareholder engagement, read PwC’s Director dialogue with shareholders – what you need to consider.