Dwindling support for ESG, executive pay outrage

New research from ISS Corporate Solutions (ICS) suggests shareholder support for environmental and social issues is on the decline, as are demands for scrutiny of executive pay.

In the annual meetings that have been held this year, only one shareholder proposal on an environmental issue and three proposals on social issues have received majority support from voters, ICS reported.

This is down from the five environmentally focused shareholder proposals and seven social proposals that received majority backing at the same point last year.

“Trends evidenced thus far this proxy season suggest waning support for shareholder proposals overall, with median support levels down five percentage points compared with calendar 2022,” Jun Frank, managing director at ICS, said in a release.

“When all is said and done, we expect support for shareholder proposals to be down over past years and potentially closer to pre-pandemic norms,” he added.

Additionally, the firm noted that shareholder dissent over executive pay appears to be declining this year, after reaching a historic high last year.

So far this year, only 4.5% of shareholder votes has seen support of less than 70% for executive pay packages, down from 7% last year. And there have been just 15 failed “say-on-pay” votes so far this year, compared with 27 in the same period last year, it noted.

“The trends we’re seeing thus far in 2023 suggest a tapering of scrutiny from shareholders that has, as our numbers show, been very pronounced over the past two years,” said Roy Saliba, managing director at ICS.

“It is also likely indicative of companies positively responding to recent concerns by actively engaging with their shareholder base and incorporating meaningful changes to their compensation programs,” he added.

The report was released in the busiest month for U.S. corporate AGMs. Some 41% of companies in the Russell 3000 index meet in May, with May 25 being the most popular date.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.