Merel Spierings of The Conference Board, has an excellent preview of this year’s proxy season. An excerpt [footnotes omitted].

The 2023 proxy season is bound to be even more challenging than previous years for the following reasons:The overall volume of shareholder proposals will likely continue to rise as a result of:

1) the SEC having narrowed grounds for excluding proposals from the company’s proxy statement;

2) new proponents who—drawn by the success of shareholder proposals in previous years—are submitting more proposals and new variations of proposals; and

3) proponents continuing to pursue a variety of agendas in submitting shareholder proposals, including getting press attention and making an ideological point, as opposed to seeking change at a company.

There will be an increase in “anti-ESG” proposals, which are often more complicated to deal with as the proponents may offer resolutions that are similar to “pro-ESG” proposals but involve different rationales, motivations, and consequences if they are approved.

Asset managers have adopted policies that will lead to more votes against directors on, among other things, governance practices and problematic compensation packages.Investors’ diminishing tolerance for adjustments, discretion, and special grants in executive compensation is expected to result in lower levels of support for company say-on-pay proposals.

Big “A” shareholder activism is likely to rise, due in part to the current economic environment and the implementation of the universal proxy.Climate-related proposals are likely to continue to be a dominant theme in 2023, but we expect a growing number of proposals on certain other environmental and social topics. Look for growing levels of shareholder proposals on issues such as biodiversity, plastic pollution, and deforestation. On social topics, expect to see shareholder proposals focusing on corporate political spending through third-party groups and on workers’ rights (particularly at companies where there is a perceived disconnect between the company’s commitments and actions on freedom of association).Declining average support for shareholder proposals on E&S topics is not a sign of ESG backlash but does reflect factors that could well continue into 2023, including

1) the nature of the proposals, especially those that are of lower quality, less relevant to the company’s business, or reflect overreach by the proponent;

2) the rationale offered by the proponent, including those that are notably “anti-ESG” even if the resolution language mirrors pro-ESG proposals;

3) the nature of the recipient, such as companies that already have strong ESG records; and

4) investors seeking common ground with companies on E&S issues, as they are trying to separate the wheat from the chaff in a growing number of shareholder proposals and steer a steady course amid growing scrutiny and multiple conflicting pressures.

2023 Proxy Season Preview – Compromise and Conflict Ahead