Barri Rafferty, CEO of Morrow Sodali, a global advisory firm, discusses key issues companies should focus on during the upcoming proxy season to stay ahead of evolving trends and investor expectations. With the increasing number of shareholder proposals, companies need to be proactive and prepared for potential roadblocks.
One major concern for companies is setting the stage for officer exculpation proposals, following Delaware’s decision to allow the exculpation of corporate officers in 2022. Companies need to file a preliminary proxy statement with the SEC and understand that the vote requires a majority of outstanding shares. Companies should analyze their shareholder profile to gauge support and consider additional solicitation efforts.
Another important issue to watch out for is the potential abuse of artificial intelligence (AI). Shareholders are increasingly focusing on responsible AI use and regulation, with companies possibly facing proposals related to the routine use of AI. As AI becomes more widespread, companies may see more nuanced proposals, such as those addressing AI replacing the workforce.
Retail shareholders are gaining power, with initiatives from firms like Charles Schwab Asset Management and BlackRock allowing individual investors to prioritize proxy voting themes. Although participation in these programs may be low currently, companies should monitor this trend to avoid vulnerability to votes influenced through alternative funnels.
Changes to SEC disclosure laws taking effect this year aim to improve investor access to material information, especially in volatile markets. Companies need to understand the amendments and be aware of tighter filing deadlines. As geopolitical conflicts and economic uncertainties persist, companies must stay connected to stakeholders’ sentiments and emerging trends for a successful proxy season.
In conclusion, companies need to proactively address issues such as officer exculpation proposals, AI use, and the influence of retail shareholders to navigate the complexities of an upcoming proxy season. Staying informed about SEC disclosure law changes and remaining responsive to stakeholder sentiments will be crucial for companies to succeed amid uncertain global conditions. Consulting with professionals for specific advice is recommended.
