Study: Shareholders File More ‘Social Policy’ Proposals

Published June 20, 2011

The Manhattan Institute’s Web site sheds light on shareholder proposals submitted to publicly traded corporations via the annual proxy process. In its seventh series of New Findings, the institute used data from its 2011 Scorecard and archived database to reveal that the overall number of shareholder proposals related to executive compensation and corporate governance is down, while the number of shareholder proposals involving social policy goals—in particular, those related to political spending—is on the rise.

FINDING 1: Number of Executive Compensation and Corporate Governance Proposals Down Significantly Since 2010.

Through June 2011, only 12 percent of all shareholder proposals dealt with executive compensation—down from 30 percent in 2008-2010.

This sharp decline is primarily due to the absence of “say on pay” shareholder proposals in 2011, since such votes are now required by the Dodd-Frank legislation.

In 2011, fewer shareholder proposals involving corporate governance have been introduced per company than in 2010 or 2009, and corporate governance proposals in 2011 fell 8 percent below the 2008-2010 average.

The decline in corporate governance proposals is at least partly attributable to companies’ adoption of many of the popular shareholder proposals from years past.

FINDING 2: Number of Social Policy Proposals Dealing with Political Spending Rises.

The percentage of shareholder social-policy proposals related to political spending was 32 percent in 2011, up from 19 percent in 2008-2010.

Nine of the 13 social-policy proposals receiving at least 30 percent support in 2011 dealt with political spending, though none has passed to date.

This increased shareholder interest in corporations’ political spending follows on the heels of the U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission, which held corporate political expenditures are free speech under the First Amendment.

The vast majority of shareholder proposals relating to political spending in 2011 were sponsored by labor union pension funds, social funds, and religious and policy groups.