tum, these proposals generated low levels of shareholder support in more recent proxy seasons. As of late June, only three E&S proposals received majority sup-
port. On the environmental side, proposals asking Wingstop and Jack in the Box to adopt greenhouse gas emission standards gained more than 50% shareholder support. Among social-issue proposals, one at healthcare company DexCom, requesting the issuance of a report on political contributions, also boasted majority support. What’s more, environmental and social corporate activism also
suffered the indignity of a rise in backlash proposals, largely in the form of requests that companies reconsider diversity, equity and inclusion (DEI) initiatives. Among other things, anti-ESG proposals asked companies to report on whether their DEI programs lead to illegal discrimination. When looking more broadly at all environmental, social and
governance (ESG) proposals, proxy solicitor Georgeson found that the numbers of anti-ESG proposals grew by over 90% in the past two years. In 2022, there were a mere 57 anti-ESG proposals, and yet in 2023 there were 94, and this past season saw 112. Even though the number of anti-ESG proposals may have surged, support has been extremely underwhelming. Georgeson reports that average votes in favor of anti-ESG social proposals hovered around 2.3% in 2024, compared to 2.7% average support in 2023 and 7.7% in 2022.
‘G’ Sees Successes, Again When it came to the trio of areas represented under the ESG umbrella, governance proposals again garnered higher levels of support in 2024 than environmental or social proposals. One new wrinkle for 2024 was a request for companies to address
the problem of “zombie holdover” directors, or board members who failed to secure a majority of shareholder support in an elec- tion and yet continue to serve. Tis year, some proponents asked companies to spell out procedures so holdover directors would tender resignations by a given date. Governance proposals may have seen more widespread support
than in other areas, but attempts to rein in executive compensa- tion through Say on Pay votes again faltered. In fact, just 0.9% of companies in 2024 received a majority vote on Say on Pay, versus 1.6% at the same time last year. Te collective indifference to executive compensation practices
stood out sharply against the rise in CEO pay during the past several months. In 2024, the median total compensation for S&P 500 chief executives skyrocketed by 12.6% to $16.3 million, up dramatically from the 0.9% rise in 2023, according to the Equilar/Associated Press CEO Pay Study, released on June 3.
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No-Action Relief Returns Te results of any proxy season are shaped by which proposals regulators allow to reach shareholders’ inboxes. In 2024, the SEC reversed a recent trend and once again gave its blessing to the exclusion of far more shareholder proposals than it had in the past few years. In 2024, nearly 100 more requests for no-action relief were submitted to the SEC than in 2023, while the SEC nearly doubled the number of exclusions of shareholder proposals compared to the previous year. Put another way, from November 2023 to May 1, 2024, the SEC
granted company requests for no-action regarding shareholder proposals roughly 68% of the time. Tis year, when asked by shareholders to break down greenhouse
gas emissions by product category, Walmart and Tractor Supply both sought and received no-action letters. Similar no-actions were given to Wells Fargo, Bank of America, and Goldman Sachs when proponents requested that the proportion of sector emis- sions attributable to clients not aligned with a credible Net Zero pathway be disclosed. One reason that the SEC gave for allowing proposals to be excluded was that it dismissed several shareholder proposals as attempts to “micromanage” company activities.
AI Proposals: A New Frontier As Microsoft, Te Walt Disney Company and the Royal Bank of Canada came to know firsthand, shareholder proposals about arti- ficial intelligence (AI) were increasingly popular this proxy season. One form that shareholder proposals took was a request for
“transparency reports” detailing a company’s use of AI. Via a 2023 shareholder proposal, the AFL-CIO asked five entertain- ment companies (Apple, Comcast, Te Walt Disney Company, Netflix, and Warner Brothers) to report publicly on their use of AI in their operations and to disclose any ethical guidelines that had been adopted. Other shareholder proposals went further in their AI demands.
For example, the proposal that Arjuna submitted to Meta and Alphabet sought a report on AI risks as well as a plan for reme- diating any potential harm stemming from misinformation and disinformation. One shareholder proposal that experts anticipate could soon
gain in popularity is for public companies to have at least one board member with the requisite expertise to address AI-related issues. From what’s been disclosed to date, an ask like this would
prove problematic for the vast majority of major American com- panies. In the year leading up to September 2023, only about
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