Tis the season_“Proxy - Voting”

Proxy Statements, Board of Directors and Shareholder’s Meetings

Proxy season is the rich springtime ritual when shareholders get to vote on issues affecting the companies they own. Management pay, directors, and the legions of environmental, social, and governance proposals (also called “resolutions”) are submitted by fellow shareholders and by the company itself. This process is called “proxy voting”.

A proxy is commonly given to cast a stockholder's votes at a meeting of shareholders, and by board members and convention delegates. A proxy is a person who represents a member in the shareholders' meeting of a company, with a legal document that could prove their authority.

Proxy statements are typically sent in the spring, indicating the start of “proxy season”—when most public companies prepare to hold their annual shareholders' meetings. Most US companies have their FY ends on December 31, and their annual meetings within five or six months after that. Proxy season runs from late April through early June, with peak week in May. Proxies typically come out about six weeks before the meeting, so you will start seeing a lot of filings beginning in mid-March.

There is also a "mini-season" six months later, for the other bulge of June 30 FY ends, with meetings in October-November. Obviously, there are notable companies with other fiscal year end dates - Apple for instance has its meeting in February since its FY end is in September.

A proxy statement is a legal document filed by a publicly traded company with the U.S. Securities and Exchange Commission (SEC) before a shareholder meeting. The purpose of a proxy statement is to provide shareholders with information about matters to be voted on at the meeting, including the election of directors, approval of executive compensation, and other corporate governance matters.

In addition to providing information about the matters to be voted on, a proxy statement also includes information about the company's management and executive compensation. This information can be useful to shareholders in evaluating the company's leadership and the decisions that are being made on their behalf.

Proxy statements are required by the SEC to ensure that shareholders are informed about the matters to be voted on at a shareholder meeting and have the information they need to make informed decisions. By law, publicly traded companies must hold annual shareholder meetings, and the proxy statement serves as a way to communicate with shareholders who may not be able to attend the meeting in person.

The proxy rules require the company to provide certain disclosures in a proxy statement to its shareholders, together with a proxy card in a specified format, when soliciting authority to vote the shareholders' shares.

Shareholders could appoint multiple proxies; for example, if the shareholder has one ordinary share and one preference share, they can appoint two proxies, each of whom will have one vote at the meeting.

In practice, where the voting at a general meeting is to be held on a poll rather than a show of hands, many shareholders opt to appoint the (board) chair of the meeting to be their proxy.

Proxy statements are an important tool for promoting transparency and accountability in corporate governance and helping shareholders make informed decisions about the companies in which they have invested.

How long are Proxy agreements valid?

Proxies automatically expire after eleven (11) months unless stated otherwise in the proxy, but in no event may a proxy have a term of more than three (3) years. (Corp. Code § 7613(b).) Proxies remain in full force and effect until revoked by the person executing the proxy prior to the vote.?

A general Roadmap to the 2023 Proxy Season:

The key to a successful proxy season is careful planning and preparation, as well as ongoing engagement with shareholders throughout the year. Companies that are transparent and responsive to shareholder concerns are more likely to win support for their proposals and maintain strong relationships with their investors.

Here are some steps that companies typically take in preparation for the annual shareholder meeting:

1. Review the previous year's proxy season: Companies should review the results of the previous year's shareholder meeting, including the votes on director elections and other proposals, to identify any areas for improvement.
2. Engage with shareholders: Companies may engage with their shareholders throughout the year to better understand their concerns and address any issues that arise. This engagement can be particularly important during proxy season, as it can help to build support for the company's proposals.
3. Develop the proxy statement: The company's legal and investor relations teams will work together to develop the proxy statement, which will include information about the matters to be voted on at the meeting, as well as information about the company's management and executive compensation.
4. Identify director candidates: The company's Board of Directors will identify and nominate candidates for election to the Board. This may involve considering the skills and experience needed on the Board, as well as the diversity of the Board.
5. Address shareholder proposals: Shareholders may submit proposals for consideration at the annual meeting, and the company will need to review and respond to these proposals in accordance with regulatory requirements.
6. Prepare for the shareholder meeting: The company will need to make all necessary preparations for the shareholder meeting, including arranging for a venue, sending out proxy materials to shareholders, and preparing presentations on the matters to be voted on.
7. Conduct the shareholder meeting: The company will hold the annual shareholder meeting and allow shareholders to vote on the matters to be considered. The Board and management team will be present to answer any questions and address concerns from shareholders.

Do Proxy-Voting seasons differ around the world?

While there are some similarities between proxy voting seasons in different regions, there are also significant differences in terms of timing, regulatory requirements, shareholder activism, and voting rights. Companies operating in multiple jurisdictions will need to be familiar with the requirements in each jurisdiction and adapt their approach accordingly.

The proxy voting seasons around the world can vary significantly depending on the jurisdiction and regulatory requirements. Here are some of the key differences between proxy voting seasons in different global regions:

1. Timing: Proxy voting seasons can vary in terms of their timing depending on the jurisdiction. In the US, for example, most companies hold their annual shareholder meetings in the spring, typically between March and June. In Europe, the timing of shareholder meetings can vary more widely, with some countries holding them in the spring and others in the fall.
2. Regulatory requirements: The regulatory requirements for proxy voting can also vary significantly depending on the jurisdiction. In the US, for example, companies are required to file their proxy statements with the Securities and Exchange Commission (SEC) and follow specific rules related to the voting process. In Europe, the rules around proxy voting can vary by country, with some countries having more stringent requirements than others.
3. Shareholder activism: The level of shareholder activism can also vary by region, with some regions having a more active and engaged shareholder base than others. In the US, for example, shareholder activism is relatively common, with many institutional investors and activist funds pushing for changes at the companies they invest in. In Europe, shareholder activism tends to be less common, although there are some notable exceptions.
4. Voting rights: The rights of shareholders to vote and participate in the proxy voting process can also vary by region. In some jurisdictions, shareholders have significant power to influence the decisions made by the company, while in others their voting rights may be more limited.?

What is the Boards role during Proxy Season?

The Board of Directors plays an important role during proxy season, which is the period leading up to a company's annual shareholder meeting where shareholders can vote on matters such as the election of directors, executive compensation, and other corporate governance matters. Here are some of the key responsibilities of the Board during proxy season:

1. Reviewing and approving the company's proxy statement: The Board is responsible for reviewing and approving the company's proxy statement, which provides information to shareholders about the matters to be voted on at the annual meeting, as well as information about the company's management and executive compensation.
2. Identifying and nominating director candidates: The Board is responsible for identifying and nominating candidates for election to the Board. This may involve considering the skills and experience needed on the Board, as well as the diversity of the Board.
3. Engaging with shareholders: The Board may engage with shareholders during proxy season to listen to their concerns and address any questions they may have about the company's performance or governance.
4. Overseeing the company's response to shareholder proposals: Shareholders may submit proposals for consideration at the annual meeting, and the Board is responsible for overseeing the company's response to these proposals.
5. Ensuring compliance with regulatory requirements: The Board is responsible for ensuring that the company complies with all regulatory requirements related to the annual meeting and proxy process, including filing the necessary documents with the Securities and Exchange Commission (SEC).

Overall, the Board plays a critical role in ensuring that the company's annual meeting runs smoothly and that shareholders are able to make informed decisions about matters that affect the company's future.

In the context, Corporate America can manage investor expectations more rigorously and frequently today than in the past by leveraging a variety of tools and strategies that have become available with advancements in technology and data analytics, helping to build trust and confidence among their investors.

Here are a few examples:

1. Investor relations: Many companies now have dedicated investor relations teams that are responsible for communicating with shareholders and other investors on a regular basis. These teams may provide regular updates on the company's performance and financial results, as well as respond to questions and concerns from investors.
2. Technology platforms: There are now a variety of technology platforms available that can help companies manage their investor relations more effectively. For example, some companies use social media and other digital channels to communicate with investors in real-time, while others use webcasts and other online tools to provide more detailed information about the company's operations and performance.
3. Data analytics: With advancements in data analytics, companies can now more easily track and analyze investor sentiment and expectations. By monitoring social media, news articles, and other sources, companies can gain a better understanding of how investors are reacting to their performance and adjust their strategies accordingly.
4. Earnings guidance: Many companies now provide regular earnings guidance to investors, which can help to manage expectations and avoid surprises. By providing clear and transparent guidance on financial performance, companies can help investors make more informed decisions about their investments.
5. ESG reporting: With the growing importance of environmental, social, and governance (ESG) issues, many companies are now providing more detailed information on their ESG performance and initiatives. By providing this information, companies can help investors understand their commitment to sustainability and other important issues.

Relevant Information:

1.?????Annual Meetings and Proxy Requirements by the U.S. Securities and Exchange Commission (SEC) https://www.sec.gov/education/smallbusiness/goingpublic/annualmeetings?

2.??????Pay Versus Performance by the U.S. Securities and Exchange Commission (SEC) https://www.sec.gov/corpfin/secg-pay-vs-performance

3.??????SEC’s New Pay Versus Performance Disclosure Rule: Important Things To Know https://corpgov.law.harvard.edu/2022/10/28/secs-new-pay-versus-performance-disclosure-rule-important-things-to-know/

4.??????Ten Key Considerations for the 2023 Annual Reporting and Proxy Season Part I: Form 10-K Considerations https://www.whitecase.com/insight-alert/ten-key-considerations-2023-annual-reporting-and-proxy-season-part-i-form-10-k

5.??????Key Considerations for the 2023 Annual Reporting and Proxy Season Part II: Proxy Statement https://www.whitecase.com/insight-alert/key-considerations-2023-annual-reporting-and-proxy-season-part-ii-proxy-statement-1

6.??????Proxy Season 2023: tools and resources from the PRI on voting and collaboration https://www.unpri.org/stewardship/proxy-season-2023-tools-and-resources-from-the-pri-on-voting-and-collaboration/11209.article

7.??????Factors That Will Impact Proxy Season in 2023

What directors and management should expect - https://www.broadridge.com/article/corporate-issuer/factors-that-will-impact-proxy-season-in-2023

Climate change, emissions plans dominate 2023 proxy season https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/climate-change-emissions-plans-dominate-2023-proxy-season-74885714

8.??????Preparing for the 2023 Proxy Season Amid New Pay Versus Performance Requirements https://www.nasdaq.com/articles/preparing-for-the-2023-proxy-season-amid-new-pay-versus-performance-requirements

9.??????2023 PROXY SEASON QUICK REFERENCE GUIDE https://www.shearman.com/en/perspectives/2023/01/2023-proxy-season-quick-reference-guide

10.??2023 United States Proxy Season Preview: Governance & Compensation https://insights.issgovernance.com/posts/2023-united-states-proxy-season-preview-governance-compensation/

2023 United States Proxy Season Preview: Governance & Compensation

ISS | Institutional Shareholder Services’ Governance Research & Voting team’s recently released report forecasts themes and trends to expect ahead of the 2023 U.S. Proxy Season. Below are select key takeaways from the report, authored by Robert Kalb, Jolene Dugan, Rachel Hedrick, David Kokell, Kevan Marvasti, Chris Scoular, and Galen S.:

?? Continued improvement in racial and ethnic board diversity. Approximately 86 percent of Russell 3000 Index companies, excluding the S&P 500, and 99 percent of S&P 500 companies have at least one racially/ethnically diverse board member. Each figure is an incremental improvement over the prior year. Additionally, nearly all industry sectors showed increased racial/ethnic board diversity year-over-year.

?? A record number of boards will be responding to low 2022 say-on-pay support. During the 2022 proxy season, a record number of companies had say-on-pay votes that failed or received significant shareholder opposition. These companies will be expected to demonstrate responsiveness through shareholder engagement efforts and actions taken to address shareholders’ concerns.

Read more key takeaways at: https://lnkd.in/eKNCp39K

#CorporateGovernance #Diversity #BoardDiversity #proxyvoting