Below is an excerpt from ISS-Corporate’s recently released paper “2024 U.S. Proxy Season Preview: Governance Back on Agenda While Sustainability Recedes”. The full paper is available for download from the ISS-Corporate online library.
The 2024 proxy season opened with two explosive court cases: a landmark Delaware court ruling that vacated Elon Musk’s pay and ExxonMobil’s court challenge to exclude a shareholder proposal on greenhouse gas emissions reduction from the proxy. These court cases highlight the emerging tensions between corporates and their shareholders.
While calls for more robust governance and board accountability are growing, pressure against Environmental & Social considerations is increasing. Both investors and issuers will need to navigate these sometimes-competing trends carefully and evaluate the impact their actions may have on various constituencies as issuers prepare their proxies and shareholders cast their votes. ISS-Corporate has examined key themes, trends, and notable shareholder proposals that are likely to shape the discourse during the proxy season.
KEY TAKEAWAYS:
- The Delaware ruling on Musk’s pay and Exxon’s court challenge highlight two key themes of the 2024 proxy season: a focus on board governance and increasing pressure against Environmental & Social (E&S) agendas.
- Shareholder proposals aiming to enhance board accountability increased significantly between 2020 and 2023, and early data suggests momentum will continue in 2024.
- Director election support continues to erode, particularly for senior board members responsible for the company’s governance, a trend that is likely to accelerate.
- Counter-ESG shareholder proposals increased in both volume and as a percentage of all proposals submitted between 2020 and 2023. Early data indicates that the increase will continue.
- More and more asset managers are offering more choices to their fund investors in how the votes are cast. As a result, votes cast by a single fund may represent a myriad of opinions and policies.
By: Jun Frank, Managing Director, Global Head of Compensation & Governance Advisory, ISS-Corporate
