A Quick Overview Of The Big Spring Meeting Season…Plus Our Bets On Next Year’s Hottest Meeting Issues
The big spring meeting season was surprisingly uneventful on the whole - with lots of proxy-access proposals passing - or being adopted voluntarily - and with most says-on-pay sailing by with 90%+ margins…much as we’d predicted.
The many threatened proxy fights we witnessed got largely settled beforehand, as companies agreed to add new directors – sometimes put forth by and sometimes approved in advance by activists – well before their record date…except, that is, for the usual number of small company fights, which are most often based on family feuds or on well-planned sneak attacks on companies that were asleep at the switch - sometimes in terms of overall management, but sometimes because the management just seemed unwary or unprepared to offer strong counter arguments on short notice to a well-organized group, looking to seize control on the cheap, as some did.
The biggest and rowdiest actions on the governance scene were the almost daily announcements of new concessions being demanded of and made by incumbent directors, in response to fresh demands for rapid changes in strategic direction from activist investors.
So with proxy access essentially a done deal across the board as time goes on, and with most companies now savvy enough to tailor their pay packages to please the proxy advisors and the mostly-easy-to-please mutual funds - but with corporate governance still a big business for lots of people - where do we think next year’s shareholder activism will be focused?
Our number-one bet as far as the new “popular issues” are concerned is for a much sharper and more aggressive focus on the board’s gender diversity - where women are way, way underrepresented – despite a lot of evidence that having more women of the board creates shareholder value in a number of ways - and where many men too are starting to say that we need to do more to right the gender balance.
But the number one way to attract activist interest, please note, is by being a fairly prominent “outlier” - whether it’s on gender or other board diversity issues - or - still the top lightening rod - performance vs. peer companies - and/or high executive pay vs. peers - followed by demands for more disclosure on environmental or sustainability issues, then by demands for more lobbying disclosures. This last item seems to be losing a lot of steam of late, mainly because most of the data IS really out there – if one looks hard enough.
Do remember, the biggest way to get struck by activist lightening is seeming not to listen carefully, or worse, to seem intransigent where such issues are concerned when activists knock.
NOW is really the right time to start benchmarking your own company’s standing vs. peer companies on all these matters - and to reach out to your top investors as soon as you spot potential “issues” - to assure them that you and your board are very actively “on the case”