Though shareholder activism increased following the launch of the Universal Proxy Card (UPC), it did not translate into a large number of proxy fights for board seats.
filed nearly 40 governance proposals requiring the automatic resignation of directors if they fail to receive majority support. Te umbrella union group AFL-CIO filed propos- als on the impact of AI on workers (to date, just one proposal that went to a vote received average share- holder support in the high 30% range), and United Mine Workers filed multiple proposals with Warrior Metal Coal using a unique approach that leverages the 14a-41 process instead of 14a-81 process. Groups connected to organized labor also filed a significant number of other proposals for labor-specific issues. Beyond the typical governance-related topics, such as separating the Chair and CEO and ensuring that directors should be elected by majority votes in uncontested elections, proponents have focused their efforts this season on ensuring that boards don’t amend bylaws to make it more difficult to nominate an alternative director slate. Reincorporation in a new state is also a topic of discussion for the 2024 AGM season, but early data this season show little evidence that companies are so far putting forward such changes this year.
Activism and the Impact of UPC Tough shareholder activism increased following the launch of the Universal Proxy Card (UPC), it did not translate into a large number of proxy fights for board seats. Settlements for minority board representation were more commonplace as issuers demonstrated they were more willing to remove vulnerable directors targeted by activists. It remains to be seen if the trend will continue into the 2024 proxy season.
niri.org/ irupdate
Shareholder activism saw substantial growth,
with 358 launched campaigns as of March 26 this year according to Diligent: an increase of nearly 15% from the same date in 2023. Issuers may choose to assess the vulnerability of
their boards to pinpoint weaknesses that demand at- tention to prepare for a potential activist shareholder situation. Companies can also strengthen board composition to deter potential activism. While factors such as tenure, race, age and gender are a starting point, deeper analyses of other factors—such as over-boarding, sector knowledge and strategic value to the company—are equally important. For IR professionals, maintaining an active share-
holder outreach program is paramount to under- standing any concerns resonating within the inves- tor community, especially regarding a specific market or company. Such a program begins with shareholder identification, analyzing their recent stock activity and scrutinizing their voting patterns from earlier years. Tis proactive approach, coupled with real-time monitoring of the shareholder base, serves as the first line of protection against potential shareholder activism. IR
Kilian Moote is U.S. Head of ESG, Georgeson and David Farkas is U.S. Head of Shareholder Intelligence, Georgeson; kmoote@Georgeson. com and
dfarkas@Georgeson.com
1 U.S. Securities and Exchange Commission, “Amend- ments To Rules On Shareholder Proposals,” https://
www.sec.gov/rules/1998/05/amendments-rules- shareholder-proposals?.
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