Ernst & Young: Proxy season results show dramatic shift

By Rob Starr, Content Manager, Big4.com

The impact of say-on-pay (SOP) goes beyond compensation; shareholder proposal topics shift and agreements for withdrawals are reached; board accountability measures continue to strengthen; and, director opposition votes show change in investors’ voting practices.

These are the four highlights  in a new Ernst & Young LLP report – Four key trends of the 2012 proxy season– reveals four emerging governance trends.

The impact of SOP goes beyond compensation. The continued overall high support for SOP proposals, averaging 90%, is in part due to engagement. As well, compensation-related proposals are now the smallest category of proposal topics while board-focused and environmental social proposals each represent 35% of the total proposals coming to a vote.

Companies have increasingly acted to implement annual board elections, adopt majority vote standards for director elections and appoint independent board leaders in response to long-standing investor support for shareholder proposals on these topics. Investors continue to press for these reforms; proposals on these three topics comprised approximately 20% of all shareholder proposals submitted for 2012 meetings to date.

While 2012 has seen an increase in attention to “vote no” campaigns, overall director opposition votes remain low and, as a result of SOP proposals, compensation is no longer a primary driver of opposition votes.