Shareholders' Boardroom Clout Increaseshttp://www.fool.com/investing/general/2013/08/20/shareholders-boardroom-clout-increases.aspx Sara Murphy
August 20, 2013
How do you make an entire corporate board squirm? Well, one way is to get enough people to support your shareholder resolution when management opposes it. And that's been happening more and more.
New research out today from the Sustainable Investments Institute, or Si2, shows that investors are filing more environmentally and socially themed shareholder resolutions now than ever before, and those resolutions are getting more support during proxy voting than they ever have. But a picture is worth a thousand words. See that trend line? It's movin' on up.
So what do shareholders want?
This year's bombshell was at CF Industries (NYSE: CF), where three separate, management-opposed shareholder resolutions garnered majority votes. The first resolution -- requesting that CF publish a sustainability report describing its environmental, social, and governance performance, including a review of opportunities to increase operational energy efficiency -- won 67% support. The second -- seeking detailed disclosure of the company's political spending practices and procedures -- garnered 66% of votes in favor. And the third -- asking that CF adopt targeted policies to promote diversity in its board composition -- achieved 51% support.
CF wasn't the only company where this happened. Alliant Techsystems' (NYSE: ATK) management opposed a shareholder resolution on its proxy ballot seeking transparent reporting on political lobbying and spending, including both "direct and indirect" lobbying and "grassroots lobbying communications." Sixty-five percent of shareholders voted in favor of this resolution.
While they didn't achieve majority votes, similar resolutions at Peabody Energy (NYSE: BTU) and Valero Energy (NYSE: VLO) gained significant support from shareholders. The resolution at Peabody, which was substantially the same as the one at Alliant Techsystems, captured 43% of the vote, up significantly from just 28% the year before. The resolution at Valero went further, seeking specific disclosure of all payments to lobbying groups on an annual basis. Supporting votes came in at 43%, up incrementally every year since the resolution was introduced in 2010.
So, then, majority rules?
More on the horizon
What's it all mean?
Certainly, there is much afoot at the SEC when it comes to corporate accountability and sustainability. There is a growing movement pressing the SEC to require companies to disclose their political spending. The SEC already requires that companies disclose their risks associated with climate change in their annual filings, and recent legal developments virtually guarantee that the SEC's requirement that companies disclose their use of conflict minerals will come into force.
Earlier this year, the SEC made a game-changing re