May 29, 2015
Activism of a Different Nature: Social Investors Advocate for Comp Changes
– Broc Romanek, CompensationStandards.com
The latest memo from Pay Governance is unique and bears reading. Here’s the key findings:
1. Sustainable investing now represents approximately 11% of the invested assets under management in the US.
2. Some sustainable investors or shareholder activists file shareholder resolutions to influence corporate environmental and social (E+S) policy, and certain E+S proposals have garnered shareholders support levels at or above 30%.
3. ISS recommends “for” about 70% of such proposals, but voting investors appear to diverge from ISS with generally low levels of support on most proposals.
4. Additionally, ISS appears to recommend “for” proposals requesting additional E+S reporting and “against” proposals that would place operational limitations on corporate issuers.
5. Shareholder proposals seeking to require the inclusion of E+S metrics in executive incentive plans are almost always rejected by ISS and the majority of shareholders.
6. Despite the fact that some companies do maintain limited E+S metrics in annual incentive plans, executive incentive programs continue to focus on financial metrics that are direct drivers of shareholder value creation.