Below are key takeaways from ISS’ recently released 2020 European Voting Results Report. The full report is available to institutional subscribers by logging into ISS Link 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.
This report is the thirteenth of an annual report series that ISS started in 2008. The report’s main purpose is to document and explain current and longer-term trends of voting outcomes at shareholder meetings across Europe. The study includes 17 European markets, with the sample covering shareholder meetings that took place between January 1 and June 30 (July 31 for 2020) of each year at main index companies in these markets.
The European average shareholder voting dissent level increased in 2020 due to the introduction of the new say-on-pay votes. An increase in median free float dissent was observed for eight markets out of the 16 analyzed (Sweden is excluded from this analysis due to its low level of vote results disclosure). Remuneration-related proposals record a higher median free float dissent than other types of proposals. Five of these eight markets experienced new say-on-pay votes.
In European markets (other than Sweden), the number of companies targeted by shareholder proposals stabilized in 2020. The number of companies receiving at least one shareholder proposal decreased from 27 in 2019 to 24 in 2020 after two increases in 2018 and 2019. The stabilization could be partly linked to the COVID-19 crisis, with some shareholders reconsidering the submission of proposals given the pandemic-related challenges that companies had to deal with. Part of the decline comes from a lower number of companies being targeted by board-related proposals. Activists and other potential proponents may have reassessed the need for board changes at some companies during the pandemic and decided to focus their efforts on a smaller number of targets or to hold for the future. (Sweden is excluded from this analysis because the number of shareholder proposals submitted in this market experienced strong swings due to the behavior of a unique shareholder.)
Support for climate-related shareholder proposals increased in 2020. It is however noted that this finding is based on a relatively small number of climate-related proposals. The number of companies targeted by an environment-related proposal increased from five in 2019 to six in 2020. All of the companies were challenged regarding their response to climate change. Three proposals of this type were supported by 14 percent or more of the votes in 2020 while the prior maximum levels of support for shareholder proposals of this type (where not endorsed by the company’s board) was 8 percent in 2019 and 5 percent in 2018.
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By Arnaud Cavé, CFA, ISS Research