Heidi Welsh, Sustainable Investments Institute: Skewed picture of shareholder proposal process in data utilized by BRT

Heidi Welsh, Director, Sustainable Investments Institute

Both the Business Roundtable and the US Chamber of Commerce Center for Capital Markets Competitiveness  comments submitted to the Roundtable docket make use of data from Proxy Monitor. This data analyzes proposals filed at the Fortune 250, and as such  presents a skewed analysis. Because  many proponents file at companies outside the Fortune 250, this Proxy Monitor data yields an inaccurate sense of the frequency of filings.

The  Sustainable Investments Institute (Si2)  analyzes a  larger universe of concern than the Manhattan Institute data, and finds different outcomes. Si2’s data demonstrates that the proportion of proposals leading to productive engagement  is underrepresented by Proxy Monitor’s data. To get a full picture of investor engagement, one must analyze all filings. This information is non-public unless a) proponent provides publicity in a press release or other announcement or b) the resolution is challenged at the SEC with a no-action letter. For instance, when it comes to analysis of engagement, Si2 finds that a high proportions of resolutions seeking sexual orientation policies, board diversity policies/reporting and sustainability reports get withdrawn at companies beyond the Fortune 250.

The Manhattan Institute data also are not normalized to SEC methods of vote counting, but rather rely on company specific standards and therefore do not allow effective cross comparison between companies on levels of support for issues.