Below are key takeaways from ISS’ recently released 2022 U.S. – Director Elections & Governance Proxy Season Review. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.
- Virtual-only shareholder meeting usage reduced, though still in a majority. With further loosening of travel and other pandemic related restrictions across the country during 2022, the utilization of virtual-only meetings fell.
- Investor dissent against director elections remained relatively high: The proportion of Russell 3000 Index directors who received less than 80 percent support remained similar year over year, while the number of Vote No Campaigns targeting directors reached a new high.
- Lack of racial & ethnic diversity on boards appears to be a significant factor in directors receiving less-than-majority support: On the heels of many investors advocating for greater board gender diversity, directors on boards with an apparent lack of racial and ethnic diversity encountered increased investor dissent.
- Shareholder proposals regarding special meeting rights dominated: Proponents focused their efforts on shareholder proposals regarding special meeting rights, representing slightly over half of all governance-related shareholder proposals on ballot in the 2022 proxy season.
- Some companies turn to limited duration preferred shares to ensure passage of charter amendments: Smaller companies, sometimes facing challenges just to meet a quorum of outstanding shares, have recently issued preferred stock with enhanced voting rights to virtually guarantee passage of proposals relating to increasing authorized shares or reverse splits.
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By: Robert Kalb, Shurui Li