US Proxy Season 2022
This past proxy season was touted as one for the ages vis-à-vis volume of ESG-related proposals. It did not disappoint. According to Georgeson, over 900 ESG-related proposals were filed for proxy season 2022. Of those, over 600 were placed on annual general meeting (AGM) dockets, compared to roughly 400 in 2021.
A more recent review conducted by the Sustainable Investments Institute (Si2) narrowed their definition to environmental, social, and sustainable governance proposals. Si2 found that 282 of these proposals came to a vote during the 2022 proxy season, also a record (as defined).
Irrespective of how ESG may be defined, the market witnessed a 50-60% increase in ESG-related shareholder proposals at USlisted companies when compared to 2021. That’s remarkable – but it wasn’t completely unexpected. Setting aside the obvious steady inflows and increased appetite for ESG- or sustainabilitylinked investment and engagement strategies, the Division of Corporation Finance at the US Securities and Exchange Commission (SEC) released Staff Legal Bulletin (SLB) No. 14L in November of 2021. The result of SLB 14L was that a greater number of ESG-related proposals succeeded in making their way onto issuer ballots for 2022.1
In addition to the record number of ESG-related proposals that were filed, the market saw a notable sum of resolutions receive majority shareholder support. Moreover, an unprecedented number of companies chose to recommend support (or offer no opinion) regarding how shareholders should vote on environmental-related proposals. 34 ESG-related proposals received majority vote totals. Although that compares to a roughly 13% year-over-year decrease, it’s the second-highest number of majority votes ever recorded. Although environmental- and socialrelated proposals saw increased levels of majority support, this did not make up for the precipitous 67% year-over-year drop in majority-supported political expenditure and lobbying proposals.
A record number of ESG-related shareholder proposal were also withdrawn. More than half were settled in some form prior to the AGM vote, thus signalling its extraordinary effectiveness as a tool in moving companies forward on ESG matters.
Lastly, we saw E&S-related activism via multiple channels beyond the shareholder proposal course of action. For example, Carl Icahn filed proxy contests with E&S-related matters as the primary focus (McDonald’s) and tertiary foci (Kroger and, to a lesser extent, Southwest Gas). To note, Mr. Icahn was able to extract a Cooperation Agreement at Southwest Gas but failed to garner support at McDonald’s, likely triggering his withdrawal at Kroger. Furthermore, shareholder advocacy groups such as Majority Action, As You Sow, and SOC Investment Group continued to file a record number of ESG-related ‘vote-no’ campaigns and attendant solicitations in support of proposals.
Looking ahead to 2023’
Rather than submit a comprehensive review of proposals that dominated the 2022 proxy season, we instead highlight themes assessed in H1 2022 that we believe will gain prominence – or, in some cases, further prominence – during the 2023 proxy season.
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Discover our thoughts for the 2023 proxy season