While the 2019 proxy season did not feature any dramatic developments, an interesting element was the slight but noticeable growth of the nascent movement against the use of environmental, social, and political factors in corporate decision-making. Led by groups such as the Free Enterprise Project and Main Street Investors Coalition, shareholder proposals against progressive initiatives increased in both number and visibility. As the number of politically-oriented shareholder proposals has grown in recent years, and as progressive stances have dominated, it is not surprising that conservative-minded investors have attempted to mount a resistance. This small but potentially significant aspect of the 2019 proxy season is an early warning signal to CEOs and directors that a challenge in coming years will be to manage divisive political issues without alienating large groups of stakeholders. While companies must engage with investors and carefully consider issues raised in dialogue or through successful proxy proposals, they must do so in a manner that does not compromise corporate strategic success. This is likely to be an increasingly difficult task.

Shareholder Advocacy Initiatives

New initiatives by large asset managers virtually ensure that the 2020 proxy season will feature a continuation of ESG proposals (including political issues). One initiative is the Boardroom Accountability Project 3.0, led by NYC Comptroller Scott Stringer. Earlier phases of Comptroller Stringer’s Accountability Project focused on proxy access and enhanced disclosure regarding board composition, and the focus of the third stage is diversity in hiring at the top levels of the corporation. Comptroller Stringer seeks broad implementation of the “Rooney Rule,” a diversity-boosting protocol borrowed from the National Football League. The Rooney Rule in the NFL requires that a team interviews minority candidates for head coach positions and, as of this year, general manager positions and front office equivalents. In Comptroller Stringer’s corporate governance initiative, the Rooney Rule would require companies to consider the candidacies of women and people of color when they seek to fill open chief executive and new board of director positions.