As the old saying goes, the third time's the charm -- but the first time can be pretty charming, too. A few notable first-time shareholder proposals have received an unexpected degree of agreement this year.
Granted, these proposals' social and environmental causes didn't attract majority support from shareholders. But they did get enough backing to draw attention to themselves, and to suggest that in the future, similar shareholder proposals may begin to tackle an ever-broader range of issues.
Fascinating first times
Straight-up corporate governance proposals are most likely to succeed with majority support. Proxy Monitor's recent findings showed that between 2008 and 2010, 19% of corporate governance proposals won approval at Fortune 100 companies.
For example, the shareholder-friendly policy of shareholder action by written consent has won majority support at major companies such as CVS Caremark (NYSE: CVS) and International Paper (NYSE: IP) this year. This policy allows shareholders to take major actions without the time and trouble of calling a special meeting.
Still, this year also saw several environmental and social proposals receive high percentages of shareholder votes, despite their rookie status:
- As You Sow recently reported that 24.6% of Target's (NYSE: TGT) shareholders supported the group's proposal for the development of a comprehensive electronic waste recycling policy.
- As You Sow also challenged McDonald's (NYSE: MCD) to consider stronger eco-friendliness in its beverage containers; 29.3% of Mickey D's shareholders agreed.
- Change to Win's first-time shareholder proposal this year, demanding that Bank of America (NYSE: BAC) stop reimbursing top executives for relocation expenses after losing money on their home sales, received 35.5% support.
- Calvert Investment Management's well-publicized diversity proposal at Urban Outfitters (Nasdaq: URBN) received the thumbs-up from 23% of shareholders.
These are even more impressive, since in many cases, environmental and social proposals don't get much attention from shareholders. Here are just a few examples of proposals with anemic support:
- Only 3.6% of Johnson & Johnson (NYSE: JNJ) shareholders supported The Sisters of Charity of St. Elizabeth's proposal on pharmaceutical pricing.
- Only about 8.1% of Starbucks' (Nasdaq: SBUX) shareholders voted for a proposal asking for a comprehensive recycling strategy. (That isn't even a first-time resolution; a similar proposal last year received 11% support.)
Proxy Monitor's data shows that over the course of the last three years, not one proposal related to social issues filed at a Fortune 100 company has gained majority support from shareholders. However, 23 proposals have received surprisingly sizeable support over 30%, with most related to disclosure of political contributions.
Changing times
It's probably tempting to discount any vote result that doesn't represent a majority, but not so fast, Fools. Increasing examples of significant support for social and environmental proposals may not be a weird anomaly, easily dismissed. Instead, these may be the first glimmers of increasing shareholder interest in the wider ramifications of companies' long-term outlooks.
Making companies more conscious of the importance of stakeholder-friendly moves would not only encourage better-built businesses, but also embarrass the heck out of corporate managers who can't live up to shareholders' new and improved expectations. That sounds like a winning proposition to me.
Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on environmental, social, and governance issues.
