Lessons from the 2022 Proxy Season—Episode 1: The Impact of the SEC

Corporate Governance co-heads Marc Treviño and Melissa Sawyer and associate June Hu open a four-part series discussing prevalent shareholder proposal trends from the 2022 proxy season. They outline the significant impact of recent actions by the Securities and Exchange Commission on this proxy season and discuss how SEC rulemaking could affect the 2023 season.

 

SEC Staff Legal Bulletin No. 14L—which reversed prior SEC guidance and altered the staff’s approach to the ordinary business and economic relevance exclusions—had a significant impact on the submission and voting trends this year. The SEC’s new approach correlated with a significant decrease in the likelihood of companies obtaining no-action relief, as the staff now assesses whether a proposal raises issues with a broad societal impact in determining whether a proposal is excludable.

 

As a result, shareholder proposals made it to a vote much more frequently this proxy season. Yet the number of passing proposals decreased, as shareholder support for social, environmental and political proposals decreased after steadily rising throughout the last decade.

 

Looking ahead, they expect ESG proponents to continue to submit more proscriptive and granular proposals to attract shareholder support. They also expect increased focus by the SEC on director qualifications, cyber security and human capital management disclosure.

 

Click here to learn more about S&C’s 2022 Proxy Season Review and watch our recent webinar.