Shareholder activism on ESG issues and dissent over executive compensation at U.S. companies are down this proxy season, according to an analysis by ISS Corporate Solutions released Friday.
With more than 40% of Russell 3,000 companies holding annual meetings in May, "trends evidenced thus far this proxy season suggest waning support for shareholder proposals overall, with median support levels down 5 percentage points compared with calendar 2022," Jun Frank, managing director at ISS Corporate Solutions, said in a release.
Of environmental and social shareholder proposals voted on at annual meetings held by May 24, only one environmental proposal, on methane emission disclosure, and three social proposals on diversity and human/labor rights, received majority support.
That compares to the same period last year, when five environmentally focused shareholder proposals and seven addressing social issues received majority support, the ICS analysis found.
Median support declined across all categories except for proposals blending E&S issues, such as those related to climate lobbying activities and health and safety issues with environmental implications. "When all is said and done, we expect support for shareholder proposals to be down over past years and potentially closer to pre-pandemic norms," Mr. Frank said.
Between 2020 and 2023 there was a 14% increase in shareholder proposals at annual meetings held between January through May, but ISS Corporate Solutions attributed that in part to the rise of anti-ESG shareholder resolutions that have grown by more than 400% since 2020.
In 2023, Amazon.com had the highest number of shareholder proposals, 18; followed by Exxon Mobil and Alphabet with 13 each; Meta Platforms at 11; J.P. Morgan Chase, Chevron, Walmart, and Goldman Sachs Group at eight; and Wells Fargo, United Parcel Service, Eli Lilly, and McDonald's at seven shareholder proposals each.
Looking at shareholder support for executive pay at annual meetings through May 17, ICS found less investor dissent than in 2022, when dissent peaked.
So far in 2023, there were 43 instances where voting support for executive pay was less than 70%, compared to 72 during the same period in 2022 and 66 in 2021. That suggests less scrutiny from shareholders, and "is also likely indicative of companies positively responding to recent concerns by actively engaging with their shareholder base and incorporating meaningful changes to their compensation programs," said Roy Saliba, ICS managing director, in the release.