The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

March 20, 2024

Exec Comp Shareholder Proposals Have Dwindled…But Climate Metrics & “Fair Pay” Persist

Recently, As You Sow, Si2 and Proxy Impact released the 20th Anniversary Edition of their “Proxy Preview” report – which tracks the number, topics and outcomes for “ESG” proposals in the current season and as compared to prior years. Of the 527 proposals that are captured in the report for the 2024 proxy season, only a handful directly relate to executive compensation. Within that small group, the proposals focus on tying pay to climate-based goals. Here’s an excerpt:

As companies have begun to take seriously the bottom-line impacts of climate change risk management and diversity considerations in human capital management, they have started to tie executive pay to specific corporate goals on these issues. Shareholder resolutions asking for these links have never received spectacular votes, but companies are taking action anyway. This year there are a few variations from As You Sow and state pension funds, at electric utilities and a couple of industrial companies, but all five are about climate change:

• As You Sow wants Cummins and General Electric to disclose a plan “to link executive compensation to 1.5-degree C-aligned greenhouse gas emissions reductions across the Company’s full value chain.” A similar proposal at Cummins last year earned 15.1 percent support, although the 2024 resolved clause is more general; the supporting statement has similar very specific suggestions, though, which As You Sow says are needed because the company claims CEO pay is linked to climate change but does not explain how.

In addition, compensation committees should continue to track “human capital” proposals. The report has a few takeaways on that topic:

– “Fair pay” & “working conditions” proposals continue to diminish. Only 41 resolutions are in play this year on the topics of gender/racial pay gaps, health & safety audits, workplace bias and paid sick leave – down from a high of 74 two years ago.

– “Living wages” proposals are emerging – this is the new twist on the general topic of “decent work,” with 7 new resolutions this year requesting policies designed to pay a living wage or to disclose information needed to assess the company’s compliance with international human rights standards.

Liz Dunshee