More shareholders are dissatisfied with corporate boards of directors than in the past, and support for environmental, social and governance proposals also has waned, according to a report released Wednesday by global financial technology company Broadridge Financial Solutions.
The 2023 proxy season was notable for the continued wide divergence in voting sentiment between individual and institutional shareholders, according to the firm. Individual investors cast only 16% of their votes in favor of ESG proposals, whereas institutions cast 25.5% of their votes in favor of them.
“Shareholder support was at a five-year low for management and shareholder proposals alike,” said Chuck Callan, Broadridge senior vice president of regulatory affairs and a co-author of the ProxyPulse report. “The proportion of company shares held by individual investors rose to 31.5%, the highest in five years, and more of them are voting.”
Shareholders have raised the bar in their expectations of directors, the report said. Among the companies studied, 654 directors did not attain majority support. And support for say-on-pay proposals (at 86.3% on average) also was the lowest in five years.
There were more shareholder proposals (588) this year than at any time over the past five years, according to the report, and yet shareholder support fell to 24.6%, on average. That’s a drop of 10 percentage points from the 2022 proxy season, Broadridge said.
Support for ESG proposals also reached its lowest point in five years. ESG support decreased to 25.5%, on average, from 30% in the 2022 proxy season.
Voting participation by individual shareholders increased to 29.6% this year from 29.4% last year.
