Ernst Young to corporate directors: Your shareholders are watching you
As the 2013 proxy season prepares to unfurl, Ernst & Young LLP's[5] District-based Corporate Governance Center has released a preview of the corporate governance themes[6] poised to dominate the conversations between boards of directors and their increasingly engaged shareholders.
Last year saw a major rise in communication between companies and their shareholders, which helped steer board priorities and investor expectations, according to the report. That trend of healthy conversation is continuing this year.
"Many management teams and boards [are] showing a greater willingness to have substantive dialogue with shareholders," the report reads. "As a result, companies are under pressure to develop effective shareholder communication practices."
One example of that is Olney-based Sandy Spring Bancorp Inc., which has received some shareholder push-back on executive pay and last week said it has tweaked its parachute payment policies[7] in ways that will likely make good governance watchdogs smile.
While companies are having better dialogue with their largest shareholders, the volume of shareholder-introduced proposals, which are inherently a bit confrontational, is still high. These proposals are put up for a shareholder vote on proxy statements, though the companies usually recommend that shareholders vote "no."
The most common shareholder proposals submitted this year, according to the report are:
- Eliminating staggered boards and electing all directors annually, as well as making them electable by a majority of votes cast, as opposed to a plurality of votes (plurality voting allows directors who were rejected by most shareholders to keep their posts)
- Reporting all lobbying activities by the company
- Appointing an independent board chair
- Eliminating accelerated vesting and tax gross-ups (where the company pays the taxes levied on some executive pay)
- Reporting political spending
- Reporting environmental sustainability
Bryant Ruiz Switzky covers banking, finance and corporate accountability.
References
- ^ Bryant Ruiz Switzky (feeds.bizjournals.com)
- ^ This email address is being protected from spambots. You need JavaScript enabled to view it. (feeds.bizjournals.com)
- ^ LinkedIn (www.linkedin.com)
- ^ Twitter (twitter.com)
- ^ Ernst & Young LLP's (www.bizjournals.com)
- ^ released a preview of the corporate governance themes (www.ey.com)
- ^ Olney-based Sandy Spring Bancorp Inc., which has received some shareholder push-back on executive pay and last week said it has tweaked its parachute payment policies (www.bizjournals.com)