Below are key takeaways from ISS’ recently released 2022 United States Governance & Compensation Proxy Season Preview. 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 shareholder meetings appear to be on the wane. As the pandemic appears to be in retreat across most of the United States, government restrictions on travel and large gatherings have abated, allowing more companies to move away from the virtual-only shareholder format. The numbers to date indicate reducing numbers of virtual-only meetings for 2022.
- Reducing number of SPAC transactions Increasing SEC regulation surrounding disclosures as well as increasing rates of shareholder redemptions appear to be making SPACs a less advantageous vehicle to access the capital markets.
- Continued focus on board composition and climate risk oversight. Investors have increased their calls for board racial and ethnic diversity. While many companies have taken action or improved disclosure, some industries continue to lag. On climate, shareholder engagement and activism are likely to continue, and the rate of success of climate-related shareholder proposals as well as the successful 2021 proxy contest at Exxon Mobil may spur further similar activity in 2022.
- COVID-19 continues to impact executive compensation and say-on-pay votes. Contrary to the uncertainty and unexpected influence of COVID-19 on 2020 pay programs, the ongoing pandemic meant most companies had the ability to more systematically incorporate COVID-19 into 2021 pay decisions, and investors will likely be less amenable to drastic pay program alterations made in response. Many investors will also be evaluating board responsiveness following an unusually large number of failed say-on-pay votes in 2021.
- The SEC is moving toward finalizing Dodd-Frank provisions. Upcoming SEC regulations could add long-awaited additional executive compensation-related requirements for US companies. While any new finalized rules would not change this year’s proxy statements, investors can look forward to the prospect of additional disclosure in future years.
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By Robert Kalb, Rachel Hedrick, David Kokell, Kevan Marvasti, Liz Williams