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Governance Watch Highlights from the 2020 Proxy Season

JULY 23, 2020


Unfolding amid the COVID-19 crisis, this year’s proxy season was filled with unexpected challenges and developments, including a swift shift to virtual annual meetings for many U.S. companies.

What were the key issues addressed at annual meetings across the country this spring? What did we learn from engagement and voting results? What does it mean for the future? As we exit an unprecedented proxy season, watch this webcast to find out.

Some of the insights from the discussion include:

  • You can take your time to read the SEC’s final rules governing proxy advisors – given the litigation challenging the SEC’s authority to treat proxy advice as a “solicitation,” the effective date of a key part of the rules, the need for further SEC guidance, and the potential impact of the upcoming US election, the rules are unlikely to have a significant impact in the near term.
  • This proxy season saw high levels of, increased shareholder support for, and a lower level of withdrawals of environmental and social proposals as proponents were less willing to compromise. Plan for those trends to continue. In particular, expect far more “S” shareholder proposals next year, but don’t expect any relief on “E” proposals – environmental issues were key coming into 2020 and they will be prominent in 2021.
  • Be prepared for more in-depth conversations with shareholders during the off-season. That means having a clear and agreed-upon agenda for each investor meeting and being in active listening mode.
  • Executive compensation and human capital management will be major topics for engagement with, and disclosure to, investors. Extra care should be taken to ensure that the human capital information disclosed is reliable and to avoid that material non-public information is provided during conversations with investors.
  • While gender diversity has received the most attention in recent years, plan for engagement on ethnic diversity in the boardroom, executive suite, and workforce; and be ready to address what your board and company are doing more broadly with respect to the workforce, workplace, marketplace and public policy to address racial inequality.
  • If your company is thinking of holding a virtual annual shareholders meeting in 2021, begin planning for it now – and discuss it with institutional investors so that your company can address their concerns and make it as much like an in-person meeting as possible.
  • BlackRock’s annual letter and those from other major institutional investors had a significant impact in 2020 directly in boardrooms and in identifying issues for discussions with other institutional investors. SASB and TCFD are likely to continue to gain traction as reporting frameworks.
  • Finally, it’s important for companies to achieve an internal consensus on their sustainability strategy (including how it has been affected by the crises of 2020) and to be prepared to communicate it in a coherent, cohesive, and consistent manner in the off-season and next year’s proxy season.

Who Should Watch: Current and prospective board members of public and private companies; CEOs, general counsel, and other C-suite executives; corporate secretaries; investors; attorneys; and other corporate governance professionals.


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