Corporate America’s proxy season is in full swing and companies are confronting votes on a diverse set of measures that they in many cases have encouraged shareholders to oppose. Their usual success in beating back those proposals may be harder than ever to accomplish this year as ever-more-assertive investors are pressuring companies to take action on everything from climate change to corporate governance.
Companies that are slated to vote proxies next week include Citibank (C), Bank of America (BAC), Johnson & Johnson (JNJ) and Pfizer (PFE). Berkshire Hathaway (BRK. B) is coming under a proposal to oust Warren Buffett as chairman.
Last year, shareholders voted a majority for 33 environmental, social and governance resolutions, an increase from 18 in 2020.
“We view 2021 as a real inflection point and 2022 as really solidifying the gains we saw in 2021,” says Jackie Cook, a director on Sustainalytics’ stewardship services team.
In fact, it has reached the point where many companies now adopt proposals in response to shareholder demand without requiring them to go for a shareholder vote. Just two years ago, companies still pushed back vigorously against investor proposals, according to Conrad MacKerron, senior vice president at As You Sow, an investor advocacy group.
“But in the last year or so, things have really accelerated,” MacKerron says. Companies are now making those decisions to comply with what we wanted within months.”
When it comes to those issues that do get onto a ballot, shareholder wins are easy to explain, said Leslie Samuelrich, chief executive of Green Century Funds, a Boston-based mutual fund company, during a webinar on April 19. Last year during proxy season, her firm worked with 130 companies and saw 25 measures it supported pass, a number they say they expect to surpass this year.
Investors, Samuelrich says, are voting with the mindset that “climate change is now a potential material risk faced by companies, and that risk is being understood by the U.S. Treasury, and the Federal Reserve, and the SEC.”
There is also pressure being applied to large shareholders such as Vanguard, which was assessed as the worst out of 30 major asset managers in showing leadership around climate commitments. There “is not one single policy on the table” with which Vanguard would limit investments in fossil fuel expansion or even use its shareholder votes to hold the world’s top polluters to account, said Lara Cuvelier of Reclaim Finance, which scored the asset managers, in a statement.
Lastly, there are the many, new-to-ESG asset managers that are scrambling to accommodate clients’ “exploding demand” for sustainable investments, says Samuelrich.
“In an effort to gain credibility, they are now voting for their proxies, so they can get credit for their proxy voting record as well,” she said.
Shareholding meeting dates include:
April 26
Citibank and Bank of America are subject to measures related to their reporting on their civil rights practices and on what steps they are taking to stop funding new fossil fuel development. Wells Fargo (WFC) is being asked to disclose details related to its incentive-based compensation, race and gender diversity at its board, how it handles indigenous people's rights, and climate change.
Charter Communications (CHTR) in a position by other companies is urged to disclose its lobbying and political and electioneering activities to ensure they match the company’s public positions and values.
April 28
Goldman Sachs (GS) is being asked to disclose its charitable contributions, and to adopt a policy that prevents its lending and underwriting from financing new fossil fuel projects. Johnson & Johnson has several measures up for votes, including one to conduct an audit of its civil rights, equity and diversity and inclusion practices and another for an audit of the racial impacts of its policies. Also on the agenda is a proposal for a report on public health costs associated with protecting vaccine technology.
Pfizer is being called to report on the “feasibility” of transferring its coronavirus vaccine intellectual property to qualified manufacturers in low- and middle-income countries and report on the “congruence” of its political spending.
April 30
Shareholders of Berkshire Hathaway will vote on whether to separate the positions of board chairman and chief executive. The measure is supported by the largest public employee pension fund in the country, the California Public Employees Retirement System. Votes on a report on how it is managing climate-related risks and opportunities, and on how it intends to measure and reduce greenhouse gas emissions associated with its underwriting and investment activities are also on the agenda. The board of Berkshire has urged shareholders to vote against the proposals.
Management projected that Netflix would lose some 2 million subscribers in the second quarter, and shares of the company plummeted. The streaming service provider lost about 200,000 paying users in the first quarter, raising concerns of slowing growth.
The shares of communication services companies also ranked as some of this week’s worst performers. Spotify (SPOT), Roblox (RBLX) and Warner Bros. Discovery (WBD) closed lower.
The increasing cost of renewable energy weighed on several solar energy stocks. The biggest losers were Enphase Energy, Shoals Technologies (SHLS), SunRun (RUN) and SolarEdge Technologies (SEDG).
