Tuesday, October 22

More Board Members Fail to Get Majority Support, Study Says

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Just say, “No.”

That’s what shareholders are doing at record levels with candidates nominated for public company boards, according to a new study by Broadridge Financial Solutions based in Lake Success.

The company said the number of Board nominees “who failed to receive majority shareholder support in the first six months of 2019 reached a five-year high, according to the company’s ProxyPulse report.

“On average, shareholder support for directors remained high at 95 percent of the shares voted,” Chuck Callan, Broadridge’s senior vice president in charge of regulatory affairs, said. “However, in comparison to five years ago, there was nearly a 40 percent increase in the number of directors who failed to get a majority of the ‘Street’ shares voted in their favor.”

Broadridge, which manages proxy voting for thousands of companies, said the number of board nominees failing to get at least 50 percent support rose to 478 compared to 416 in the first six months of 2018.

The report, published by Broadride and PwC US Governance Insights Center, examined votes at 4,059 public company annual shareholder meetings between January 1 and June 30, 2019.

According to the report, institutions own 70 percent of shares, while individuals own a scant 30 percent, flat with previous years. But institutions vote, while individuals watch.

Ninety percent of institutional votes are cast, compared to only 28 percent owned by individuals.

The number of proposals that voted on by shareholders dropped 23 percent to 420 from 549 in 2015. Support dropped from 31 percent of shares voted in favor in 2018 to 29 percent in 2019.

Support for say-on-pay proposals declined from 89 percent in 2018 to 88 percent in 2019.

Support for corporate political spending proposals rose to 31 percent in 2019 from 28 percent in 2018.

Broadridge’s proxy voting services are used by more than half of public companies and mutual funds globally.

The ProxyPulse report highlighted policies of a few of the largest institutional investors regarding board diversity and environmental issues.


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