We've heard a lot about "Shareholder
Spring" this year - the idea that this proxy season shareholders were
actively standing up and forcing changes in the boardroom. Some of this is
attributed to Dodd-Frank and a mandatory say-on-pay vote (one that is
nonbinding, but more about that later). Actually, it seems as if we hear a
lot every proxy season about surprising vote tallies or outspoken shareholders
and their impact. One or two stories make the rounds and we're told
progress is being made - corporations are being held to account by the shareholders. But
is that really true? With all the proxy advice, say-on-pay, shareholder
actions, etc., what is the real effect?
We were told, by The
New York Times, that the number of shareholder proposals went up 3% this
year. Is that alone a success? Let's look at the outcomes of
these proposals, so far. Ernst & Young, in Proxy
Season 2012, Early Voting Results, report that "Early vote results from the
2012 proxy season reveal that" increased disclosure and communications efforts
by corporations, "are helping to secure strong support amid investor
pressure." Still, E&Y tells us that there was little support for votes
opposing board member re/election - only 3.8% of these votes got more than 20%
support. And support for pay packages has been strong despite the one or
two instances played up for good media stories. Pay votes, so far,
averaged 91% of votes. One article in The
Guardian last month seemed to have a more reasonable view of shareholder
success, "Investor revolts have claimed some scalps, but radical reforms
to how companies are managed and directors paid is years off."
That sentence says it all: any real change is still years
away. Active owners and fiduciaries in the trenches keep chipping away at
this issue year after year and I am thankful for their tenacity. But let's
be realistic about any gains and certainly about any successes brought on by
Dodd-Frank. Say-on-pay has had no effect on salaries, there were no real
fights over board appointments and my
never-ending effort for an independent board chairman at Exxon is still a
work in progress.
It's Kabuki theater. But it always boils down to
the same results. Each year we read stories about amazing confrontations
with corporate America but whatever the story, the results rarely vary from
year to year.
Did we have a shareholder spring? I don't think
so. Do you?
Read more blog posts on corporate governance at the Robert
A.G. Monks blog
For more information about LexisNexis
products and solutions connect with us through our corporate site.