Corporate governance was among the most prominent themes impacting public companies in 2015. Will the same concerns dominate the year ahead? Let’s see what can be learned from looking at the biggest overall trends:
The Big Issue – Proxy Access
Shareholder proposals generally reached a massive level in 2015, and proxy access was clearly their major focus. The broad results of these proposals were good to modest, with slightly less than 60% getting a majority of shareholder votes. The burning question will be to what extent companies where proxy access measures were passed will have implemented them by the time this year’s annual meetings arrive.
Getting Direct with Director
Investor activism revealed changing expectations for company directors over the past year. Not only did calls for election of directors continue, but shareholder actions broadly show an increasing desire for directors to have more direct interactions with investors, as well. The consequences of these desires may not be clear yet, but shareholder sentiment is likely to increase in this regard.
Minding the Money
Shareholders showed serious interest in executive compensation. Say on pay proposals continued a year-over-year trend of strong investor support. Investor proposals additionally addressed issues related to executive vesting in certain situations and clawback concerns, among others. While these proposals made it onto ballots, support was mixed, at best.
Political Agenda Not a Priority
Proposals concerned with governance around environmental and labor issues took a backseat to the activist issues addressed above. None of these proposals received a majority vote in 2015.
Boards Becoming More Proactive
The efforts of companies to engage with and anticipate investor concerns and actions resulted in a number of cases where powerful activist initiatives were unsuccessful, the DuPont proxy fight being the biggest example. Expect both shareholders and boards to learn from these as 2016 progresses.
International governance trends in 2015 were focused on issues of diverse representation on boards, director independence, accountability and transparency. The overarching theme that applies to both international and U.S. companies is implementation. In cases where companies have made commitments to change, how well will they follow through? The answers to this question will be crucial for governance issues in 2016.