2019 Proxy Season: Achtung Baby

By DirectorCorps

An old danger sign in sepia tone

April 30, 2019 All Industries Activism

Another proxy season is underway—leaders beware. As usual, top concerns fall into three buckets: corporate governance, executive compensation, and regulatory disclosures. Within those are 20 or so areas that law firm Skadden Arps identified in its 2019 proxy season guide, which include cybersecurity, generally accepted accounting principles, the pay ratio disclosure rule, board diversity, social media, say-on-pay votes, the JOBS Act, proxy advisory voting guidelines and board evaluations.

A favorite pain point for company leaders year after year is the role of proxy advisory firms. This year, advisory firm Glass Lewis attempted to improve the process of sending feedback via its Report Feedback Statement service. The company stated that this service “provides a unique opportunity for public companies and shareholder proposal proponents…to submit feedback about the analysis of their proposals and have comments delivered directly to our investor clients.”

Meanwhile, Institutional Shareholder Services announced that it would begin studying Economic Value Added metrics in its evaluations this year, for informational purposes only. On this matter, ISS is not moving in mysterious ways. Last year, the company bought EVA Dimensions, a consulting company; considering EVA metrics is a natural next step.

Keeping track of changing reporting around GAAP, cybersecurity and other regulatory filings remains a never-ending task for company executives. And, while it isn’t regulated yet, virtual shareholder meetings are growing more popular and polarizing. For more on this, take a look at the pros and cons of virtual-only shareholder meetings.

This season, who’s going to ride the wild proxy votes? And who’s going drown in a sea of negative press? Proceed with caution.