Takeaways From the 2022 Proxy Season: The Year of Withdrawals

Written By Delphine Robert, Senior Consultant

June 30, 2022

More proposals have led to more willingness to reach common ground.

The 2022 proxy season saw 924 proposals filed—a record number. As we noted in our expectations for the 2022 proxy season, the SEC revised its definition of ordinary business, ultimately paving the way for a higher number of social and environmental shareholder proposals to pass the SEC hurdle and force company consideration of key issues. Data indicates that the SEC only approved about 16% of companies’ bids to omit proposals from their ballots in 2022, compared to 50% the prior year. In addition to the record number of submissions, we’ve also witnessed a near-record number of proposal withdrawals. This suggests that corporate leaders have been inclined to meet with shareholders to reach consensus.

So, what are these new proposals all about?

As we look to the topical focuses of this season’s ESG-related shareholder proposals, as usual, governance topics lead the way, followed by social and environmental, respectively. To learn more about shareholder sentiment and market priorities, we’ll dig into the trends and the most popular proposal topics a bit deeper.

Civil Rights and Pay Equity

The proxy season kicked off with some big names receiving majority supported shareholder proposals, especially on topics related to social equity. At Apple, a shareholder proposal requesting a civil rights audit received 53.6% support, the first time in a decade that a shareholder proposal passed at the company. And at Disney, a pay equity proposal received 60% support.

A big victory for many shareholders came in relation to DEI proposals: Of the 50 proposals filed on the topic, half were withdrawn, signaling a degree of proactiveness from companies that likely noticed the success of DEI proposals in 2021.

Abortion Rights

Shareholder proposals are often reflective of societal happenings. Last proxy season marked the beginning of racial equity audit proposals. This year, the regression of abortion rights for women in many states has become a key theme in new proposals.

Since the Supreme Court’s ruling on the issue, a number of companies have stated they will pay for employees to travel to states with more lenient abortion laws. Even before the ruling was made official, proposals appeared on the ballots of Walmart, TJX, and Lowes asking the companies to estimate costs associated with a potential Roe v. Wade reversal. Two of these proposals received more than 30% support.

Political Activity

As expected in a mid-term election year, shareholder proposals on corporate political activity continue to be filed in high numbers, accounting for almost a quarter of all social proposals in the 2022 season. So far, two proposals—one on political spending filed at Travelers and the other on lobbying filed at Dollar General—have received majority support.  

Johnson & Johnson experienced a slight variation on the lobbying proposal theme. The proponent requested the company conduct a third-party review of its lobbying activities and alignment with its position on universal health coverage. This proposal received 43% support.

Carbon Emissions

With Scope 1 and 2 emissions reporting becoming increasingly common among public companies (and soon to be required under the current proposed SEC rule) shareholders are now asking for more progress in the form of emissions reductions targets.

For instance, AutoZone and Sysco shareholders voted overwhelmingly in favor of the companies’ adoption of net zero targets in late 2021. In January of 2022, Costco shareholders voted in favor of the adoption of the company’s own GHG emissions reduction goals. Similarly, Chubb and Travelers both faced proposals that received majority support, asking the companies to report on GHG emissions.

In addition to growing shareholder support for emission-related proposals, this season has seen another critical trend emerge: withdrawals of such proposals. Of the 56 proposals filed on the topic, 31 were withdrawn, and 23 of those withdrawals mentioned that consensus or general progress with company leadership had been achieved.

Fossil Fuels

Increasingly, shareholders are transitioning their focus on fossil fuels away from energy companies directly and toward the organizations that are funding or supporting the fossil fuel industry.

Banks and insurance companies received a significant number of proposals in line with the Internal Energy Agency’s (IEA’s) Net Zero Emissions by 2050 scenario. At banks, proponents requested that companies stop financing new fossil fuel projects in alignment with their membership in the Net-Zero Banking Alliance. These proposals received only around 12% support, but that was enough to surpass the requisite threshold for resubmission next year.

Insurance companies received similar proposals requesting a halt to new fossil fuel projects underwriting. Just one survived the SEC hurdle: a Chubb shareholder proposal that received just under 20% support.

Anti-ESG Proposals

We would be remiss if we did not mention the rise of the so-called anti-ESG proposals appearing on the ballots of companies. These proposals tend to manifest as mirror images of traditional ESG-related proposals. In other words, they have the opposite intent and may, for example, ask companies to not report greenhouse gas emissions or to not disclose or alter political spending practices.

In 2022, the number of anti-ESG proposals on the ballot doubled compared to the prior year. However, these proposals have received single digit support. Despite the increased number, the rise anti-ESG proposals seems, to many, to be an indication of increased politicization rather than actual investor sentiment at large.

Be Prepared to Address Your Shareholders’ Concerns

The increases in proposals filed and subsequently withdrawn suggests that companies must be ready to engage with their shareholders on a wider range of topics than ever before. If you need counsel around a shareholder proposal topic, think your company may be at risk of receiving a new shareholder proposal, or are concerned about low investor support on an existing item or issue, please contact us. Our experienced proxy advisory team provides strategies to mitigate issues. We can help you build a successful investor engagement plan tailored to your company’s specific needs.

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