| Sullivan & Cromwell has released Part 1 of its series of memos about shareholder proposals for this year. Here’s a summary of what S&C found: Shareholders submit 733 proposals for meetings in the first half of 2021, the highest number since S&C began tracking submissions
Social/political proposals:
· Proposals on workforce diversity, EEO-1 reporting and limiting mandatory employment arbitration receive near or over 50% average support
· Social/political proposals comprise 40% of submissions for H1 2021 meetings, with the number increasing 39% compared to H1 2020
· Main drivers of growth are dramatic increases in submissions on employee-related diversity, equity and inclusion (DEI) and social capital management issues (93% and 43%, respectively)
· Proposals on political spending and lobbying decline, comprising 22% of social/political proposals (compared to 30% in H1 2020)
· When voted, social/political proposals receive 30% average shareholder support (compared to 28% in H1 2020)
Governance proposals:
· Board diversity proposals receive 59% average support
· Continuing a five-year trend, the number of governance proposals further declines (38% of proposals compared to 46% in H1 2020)
· Almost three-quarters of governance proposals relate to structural governance issues, with focus on proposals to amend existing shareholder rights (e.g., written consent, proxy access and special meetings)
· As has been the case in prior years, a majority of governance proposals go to a vote (72%) and voted proposals continue to receive high support (40%)
· Prevalence of board composition proposals decreases meaningfully (26% of H1 2021 governance submissions compared to 31% in H1 2020, when many companies announced their commitment to board diversification efforts)
Environmental proposals:
· When voted, environmental proposals receive higher average shareholder support (41%) and the percentage of majority-supported proposals increases significantly (to 36% from 16% in H1 2020)
· Environmental proposals increase 40% over H1 2020, comprising 16% of submissions
· Nearly three-quarters of submissions in this category relate to climate
Compensation proposals:
· Consistent with prior years, very few 2021 submissions are compensation proposals (7% of all H1 2021 submissions), and no compensation proposal gains majority support
· Despite a 17% decrease in the total number of compensation submissions, proposals for compensation linked to environmental performance metrics increase by 29%
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