(We’re back with our sixth – and final – installment of the AGM voting results. This week’s covers the voting through June 21st.)
With 408 of the S&P 500 having reported in on their AGM’s and much of the remainder on mid-year fiscal years, we have reached the unofficial close of proxy season. Below are the final tallies and our final thoughts on the 2018 AGM season.
By proposal category:
Audit – As noted, General Electric received some extra pressure from shareholders on an auditor with over a 100 year tenure. However, just this week, SEC Commissioner Jay Clayton reiterated that auditor rotation was not on his radar. While prevalent in Europe, this may be one of those governance standards that takes a while to cross the pond.
Capitalization – Proposals in S&P 500 companies requiring shareholder approval to change the capital structure continue to wane in 2018 alongside strong corporate performance – but a few proposals specific to how companies handle share buyback programs did make it onto proxies. This is an area to keep an eye on for late 2018 – are shareholders going to use their votes to push companies on capital structure decisions resulting from benefits of onshoring cash in the new tax plan?
Compensation – Overall shareholder support on compensation proposals declined 1.3% from last year to 90.6%, while say-on-pay support fell 1.0% to 90.6%. June did produce a few new weaker results on compensation plan votes, with TJX Companies receiving just 51.7% support for an exec comp plan; viewing all compensation plans in aggregate, shareholder support dropped from 92.5% to 90.6% (-1.9%) – this may be a warning signal for any companies looking to change their equity comp programs in 2019.
Director Election – A slight increase of 0.1% support to 97.0% this year, but in total the incidence of lower support was a bit less prevalent this year. 2018 saw 179 directors receive less than 90% support to date, down sharply from 239 directors in the prior year. While Vanguard, BlackRock, and SSGA have been more vocal this year about pressuring nomgov committees on board diversity, it’s possible that boards were more responsive in 2018 after several “shots across the bow” from SSGA in 2017 – we’ll see what the NPX filings in August show us about the specific voting practices of these firms.
Environmental / Social – As noted before, this year’s results in the ESG space correlate not with greater support for the proposals themselves, but with far fewer abstentions than last year – as noted, names like Geode Capital, GAMCO, and Columbia Threadneedle may have switched away from more common abstain votes as seen in 2017. Last year’s flurry of low votes on environmental proposals wasn’t repeated this year (just 27 proposals in the S&P 500 at 2.4% increased management support), but political and social proposals did receive less management support.
Governance – From prior editions, we highlighted the strong support shareholder proposals were receiving on board structure concerns – with just 68.2% of votes favoring management this year, down from 76.0% in 2017. That said, it does look like contentious proxy access proposals have slowed, with 72% support for management on only 24 proposals this year relative to 38 in the S&P 500 last year.
See the latest report: S&P 500 AGM Voting Results for 1/1/18 – 6/21/18
5.30.18 report: S&P 500 AGM Voting Results for 1/1/18 – 5/30/18
5.22.15 report: S&P 500 AGM Voting Results for 1/1/18 – 5/22/18
5.15.08 report: S&P 500 AGM Voting Results for 1/1/18 – 5/15/18
5.08.18 report: S&P 500 AGM Voting Results for 1/1/18 – 5/08/18