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ISS-Corporate, a leading provider of compensation, governance, cyber risk monitoring, and sustainability offerings to help companies improve shareholder value and reduce risk, released an analysis of key themes, trends, and notable shareholder proposals expected to shape the 2024 U.S. proxy season. Against a backdrop of high-profile court cases bringing to the forefront corporate governance and sustainability, the report forecasts two main themes dominating the 2024 season: an increased focus on board governance and increasing pressure against corporate consideration of environmental and social (E&S) matters.
Key findings and predictions from the analysis include:
- The report suggests that board accountability will be in the spotlight in 2024. Shareholder proposals aimed at enhancing board independence and accountability increased dramatically between 2020 and 2023, and early data suggest a continuation of that trend in 2024.
- Director election support continues to erode, particularly for some senior board members with certain committee responsibilities and ISS-Corporate predicts this trend will accelerate in 2024. Within the Russell 3000, median support levels for non-employee board chairs, lead directors, and nominating and governance committee chairs markedly declined to 94.9 percent in 2023 from 96.8 percent in 2018.
- Say-on-pay support has also eroded in recent years, and the report suggests that special equity grants likely will be an area of focus for investors in the 2024 season.
- Emerging data points to a continued increase in so-called counter-ESG proposals based on approximately 350 shareholder proposals tracked by ISS-Corporate as of mid-February with counter-ESG proposals representing more than 13 percent of the total submitted thus far for 2024 shareholder meetings.
- The report forecasts support levels for E&S proposals will remain flat through the 2024 season after falling significantly in 2023.
- A growing number of asset managers are offering voting choice to enable their underlying to direct how the votes are cast. As a result, votes cast by a single fund may represent a myriad of opinions and policies.
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“The Delaware Chancery Court’s landmark decision regarding Elon Musk’s pay package will serve to put governance firmly back in the spotlight this annual meeting season,” said Jun Frank, Managing Director and Global Head of Compensation & Governance Advisory at ISS-Corporate. “That, coupled with increasing pushback on environmental and social issues, will necessitate that both investors and their portfolio companies carefully navigate these changing dynamics as the U.S. proxy season kicks off.”
Read ISS-Corporate’s full analysis here.