Issue link: https://digital.shearman.com/i/1035491
Shearman & Sterling 18 | Proxy Access PROXY ACCESS: SHIFTING BATTLE LINES INSIGHTS By Stephen Giove and Daniel Yao While the number of proxy access proposals in the 2017 proxy season was down compared to 2016, it would be a mistake to conclude that proxy access is no longer a major corporate governance topic. Shareholder proponents with familiar names like James McRitchie and John Chevedden reloaded and sought new ways to chip away at proxy access by-laws that companies have adopted. Meanwhile, the New York City Comptroller (NYCC) continued to march forward and submitted another 70 proposals to companies asking for adoption of proxy access. Many battles still remain to be fought in this long-running corporate governance war. PROXY ACCESS ADOPTION 275 87% * 442 84% 317 * of the companies that received "adopt" proposals in 2015-2017 adopted a proxy access by-law, representing an adoption rate. U.S. Listed Public Companies of the 2017 Top 100 Companies 62% of the S&P 500 One might think that the above percentage is so high because it only represents companies that had an "adopt" proposal pass, but it in fact includes companies that have successfully defeated proposals as well (sometimes multiple proposals in different years), with the adoption rate at this latter group of companies being an eye-popping 67%. As proxy access reaches mainstream acceptance and support among institutional investors continues to increase, many companies are reaching the conclusion that proactive adoption is the best option, even if they have been successful in fending off a proposal in the past. This has led to a market penetration turning point in 2017, as illustrated by the numbers on the right. NUMBER OF COMPANIES THAT HAVE ADOPTED PROXY ACCESS 2015 2016 2017 * Excludes companies that received an "adopt" proposal and (i) were acquired or filed for bankruptcy (10 companies) or (ii) had such a proposal receive a majority vote in favor for the first time but have not yet adopted a proxy access by-law (10 companies). 2017 Top 100 Companies' Cumulative Adoption Rate 7% 69% 84% Note: All data in this article is as of August 31, 2017, unless otherwise noted.