Shareholder proposals in the new millennium: Shareholder support, board response, and market reaction

Thomas, Randall S.; Cotter, James Finn

doi:10.1016/j.jcorpfin.2007.02.002

Cited by 210 publications

(227 citation statements)

References 14 publications

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“…Ertimur et al (2011) finds that the rate of implementation for compensation-related proposals is only 5 percent but increases to 32 percent when the proposal receives a majority vote, and documents that firms with excess CEO pay before being engaged decrease total CEO pay on average by 38 percent. Thomas and Cotter (2007) and Ertimur et al (2010) document that after 2002 boards have become significantly more responsive to shareholder proposals winning majority votes, resulting in directors being increasingly willing to remove important anti-takeover defenses, such as the classified board and poison pill, in response to shareholders' requests. However, despite the increase in support for shareholder proposals and board action in response, these studies find little evidence of any effect on firm value.…”

Section: Shareholder Activismmentioning

confidence: 99%

Shareholder Activism on Sustainability Issues

Grewal

Serafeim²,

Yoon³

2016

SSRN Journal

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Shareholder activism on sustainability issues has become increasingly prevalent over the years, with the number of proposals filed doubling from 1999 to 2013. We use recent innovations in accounting standard setting to classify 2,665 shareholder proposals that address environmental, social and governance (ESG) issues as financially material or immaterial, and we analyze how proposals on material versus immaterial issues affect firms' subsequent ESG performance and market valuation. We find that 58 percent of the shareholder proposals in our sample are filed on immaterial issues. We document that filing shareholder proposals is effective at improving the performance of the company on the focal ESG issue, even though such proposals nearly never received majority support. Improvements occur across both material and immaterial issues. Proposals on immaterial issues are associated with subsequent declines in firm valuation while proposals on material issues are associated with subsequent increases in firm value. We show that companies increase performance on immaterial issues because of agency problems, low awareness of the materiality of ESG issues, and attempts to divert attention from poor performance on material issues.

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Section: Shareholder Activismmentioning

confidence: 99%

Shareholder Activism on Sustainability Issues

Grewal

Serafeim²,

Yoon³

2016

SSRN Journal

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“…Whilst most companies have implemented measures to promote social equality and environmental sustainability (Matthews, 2014), others are still unresponsive to stakeholders' calls for transformation. Although shareholder activism could be instrumental in changing corporate policies and practices (Wen, 2009;Thomas & Cotter, 2007), shareholder activism is still uncommon in South Africa (Viviers, 2014).…”

Section: "With Great Power Comes Great Responsibility"mentioning

confidence: 99%

“…In contrast, Ferri and Maber (2013) noted that UK firms responded to negative say-on-pay votes by removing controversial CEO pay practices. Increased support for shareholder resolutions in recent years has furthermore resulted in boards becoming more willing to remove antitakeover defences (Thomas & Cotter, 2007), and to reform pollution management practices (Lee & Lounsbury, 2011).…”

Section: Raisingmentioning

confidence: 99%

Institutional proxy voting in South Africa: Process, outcomes and impact

Viviers

Smit

2015

SAJBM

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This study investigated the nature of institutional shareholder activism in South Africa with a particular focus on proxy voting as a public form of shareholder discontent. A total of 24 510 votes cast by 17 local investment management companies in 2013 were analysed. Interviews were also conducted with selected investment managers to gain more insight into the proxy voting process at their companies. Based on this data, it was concluded that investment managers preferred to engage with investee companies in private and viewed proxy voting as the last link in the shareholder activism chain. As a result, only 6.6 per cent of all votes were 'against' resolutions tabled by 347 JSE-listed companies in 2013. Resolutions regarding shareholders' endorsement of companies' remuneration policies; the election and re-election of directors, particularly those serving on audit committees; and the issuance of ordinary shares elicited the most opposition. Companies that were excluded from the JSE's Socially Responsible Investment Index in 2013 attracted significantly more opposition than their counterparts who were included in the index when seeking shareholder approval on the election and re-election of directors and the placing of shares under the control of directors. The same applied to companies that had low environmental, social and governance disclosure scores in 2013 as regards the issuance of shares. It is recommended, amongst others, that shareholder activism in South Africa be promoted by enhancing investor education and effecting some regulatory changes.

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“…17 The IRRC directors' database contains information on more firms' board composition than director ownership, and we thus lose only about 30 percent of the sample observations when board variables are included in the analysis. 18 For example, comparing the mean characteristics of the shareholder proposal firms to those in Thomas and Cotter's (2007) study of shareholder proposals from 2002-04, the mean institutional holdings are similar: 68 percent compared to 67 percent, respectively. Our firms are slightly less profitable: mean return on assets of 3 percent compared to 4 percent, respectively and net profit margin of 5.6 percent compared to 6.2 percent, respectively.…”

Section: Resultsmentioning

confidence: 95%

Institutional Investors and Proxy Voting: The Impact of the 2003 Mutual Fund Voting Disclosure Regulation

Cremers

Romanò

2007

SSRN Journal

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This paper examines the impact on shareholder voting of the mutual fund voting disclosure regulation adopted by the SEC in 2003, using a paired sample of proposals submitted before and after the rule change. We focus on how voting outcomes relate to institutional ownership and the voting behavior of mutual funds. While voting support for management has decreased over time, there is no evidence that mutual funds' support for management declined after the rule change, as expected by advocates of disclosure. In fact, in the context of management-sponsored proposals on executive equity incentive compensation plans, mutual funds appear to have increased their support for management after the rule change. We also find that this result is not due to changes in compensation plan features, nor that voting outcomes were plausibly related to broker voting, which was eliminated in a parallel 2003 stock exchange rule change. Finally, there is some evidence that firms with greater mutual fund ownership adopt a higher frequency of sponsoring executive equity incentive compensation plans, which could partly explain our findings.JEL codes: G34, G38, K22 * We have benefited from comments of Stanislav

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Shareholder proposals in the new millennium: Shareholder support, board response, and market reaction

Cited by 210 publications

References 14 publications

Shareholder Activism on Sustainability Issues

Shareholder Activism on Sustainability Issues

Institutional proxy voting in South Africa: Process, outcomes and impact

Institutional Investors and Proxy Voting: The Impact of the 2003 Mutual Fund Voting Disclosure Regulation

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