2024 Proxy Season Review: Corporate Resilience in a Polarized Landscape

The 2024 proxy season was marked by increased partisanship and political uncertainty, making shareholder proposals even more contentious compared to the past. This report outlines the key developments of the 2024 proxy season and offers practical insights for companies to strengthen offseason investor engagement as well as prepare for the challenges of the 2025 proxy season.

Key Insights

• The high volume and specificity of shareholder proposals has emboldened companies to counter them through no-action requests and more pointed proxy statement disclosures, leading to a rise in omissions and a drop in average support.
• While overall support for shareholder proposals declined, 2024 saw a notable increase in average support for governance proposals, signaling a focus on governance as a cornerstone of corporate success.
• In today’s polarized environment, with competing and conflicting demands from proponents on both sides of the political aisle, it’s vital for companies to clearly connect their environmental and social (E&S) initiatives to their core business strategy.
• While directors received strong average support in the 2024 proxy season, governance concerns remain key factors driving investors to vote against directors.
• 2024 saw an uptick in average support for say-on-pay, but companies engaging in controversial pay practices will face an uphill battle in justifying their decisions to investors

Shareholder Proposals Surge in 2024, but a Smaller Percentage Reach a Vote

• The proliferation of prescriptive and repetitive shareholder proposals has prompted companies to become more assertive, and successful, in their responses. The high volume and specificity of proposals—often either addressing detailed operations, lacking economic merit, overlooking existing policies and practices, and/or of poor overall quality—has increased companies’ willingness to counter them through noaction requests and more pointed, incisive proxy statement disclosures—leading to more omissions and lower levels of support. However, while bold responses can be effective, companies risk backlash if their responses appear too aggressive or misaligned with investor priorities.

During the first half of the year, shareholders submitted 918 proposals at Russell 3000 companies, up from 836 in the same period in 2023. This number surpasses the 881 proposals filed throughout all of 2022. Interestingly, a lower share of these proposals went to a vote in the 2024 proxy season (65% compared to 70% in 2023), mainly due to more proposals being omitted (15% in 2024 versus 9% in 2023). The withdrawal rate for proposals remained constant at 20% in both 2023 and 2024.

Shareholders filed 39 more governance proposals (versus 17 E&S proposals) in the first half of 2024 compared to the first half of 2023. However, unlike last year, when governance proposals were most likely to come to a vote compared to other categories (85% versus 61% of E&S proposals), this year, they were least likely to be voted on (63% versus 65% of E&S proposals).

Governance proposals were most likely to be omitted. In fact, the share of omitted governance proposals more than doubled, from 11% in 2023 to 24% in 2024. Companies also saw greater success in reaching settlements on governance topics: the share of proposals that were withdrawn rose from 4% in 2023 to 12% in 2024.

SEC’s no-action request statistics saw the reversal of a downward trend. In the 2024 proxy season, companies submitted 251 no-action requests—a 50% jump compared with the 2023 season (167 requests). Moreover, this year, the SEC granted a majority (55%) of those requests (versus 45% in 2023) and rejected only 24% (versus 37% in 2023), suggesting a shift in its approach towards shareholder proposals.

With 65 requests granted, the most successful exclusion category was Rule 14a-8(i)(7), which addresses “ordinary business,” followed by Rule 14a-8(b) “unmet qualifying ownership requirements,” (26 requests) and Rule 14a-8(i)(2) “implementation would violate law” (24 requests). The most successful topic for no-action relief was director resignation, with 31 requests granted, followed by miscellaneous governance issues and climate-related topics (25 and 23 requests, respectively).

• While seeking no-action relief is resource-intensive, companies may continue to find success based on arguments that proposals are overreaching and inappropriately limit the discretion of the board.

Companies Should Brace for Increased Scrutiny of Their Governance Practices

• The 2024 proxy season largely mirrored 2023 with a rising number of shareholder proposals and another decline in average support for those proposals. However, it differed in one key aspect: there was a notable increase in average support for governance proposals, signaling a focus on governance as a cornerstone of corporate success.

Proposal flaws or paradigm shift? A closer look at the waning support for E&S proposals For the third consecutive year, average support for E&S proposals has declined. Notably, in its recent investment stewardship report, BlackRock revealed it supported a mere 4% of shareholder proposals focused on E&S issues in the year leading up to June, marking a sharp drop from the 47% support seen in 2021 and a decrease from 7% last year. Meanwhile, Vanguard did not support any E&S proposals in the year leading up to June. Despite coinciding with rising political tensions surrounding corporate E&S initiatives and an increase in ESG backlash, this lack of support does not indicate that mainstream investors are merely yielding to external pressures; nor does it suggest they are losing interest in E&S or reflect a shift in their voting policies. Rather, the decline can be attributed to the fact that many E&S shareholder proposals continue to be prescriptive and micromanaging, costly to implement, lacking in economic value, not company-specific, and/or repeat previously addressed issues. Moreover, prompted by major institutional investors’ efforts in recent years, companies have made substantial improvements in disclosures on E&S topics and the quality of the data they provide.

Sharp increase in average support for governance proposals, especially those aimed at strengthening the rights of minority shareholders

While more governance proposals were filed in 2024, fewer went to a vote compared to 2023, but those going to vote were, on average, significantly more successful. In the first half of 2024, governance proposals received 39% average support (versus 29% during the same period in 2023), and 41 proposals received majority support (versus just 16 in 2023).

• The overall success for governance proposals is largely driven by the passage of a significant number of proposals aimed at eliminating the supermajority voting requirement. In 2024, significantly more of such proposals were filed (51 versus 15 in 2023) and voted on (43 versus 13), and proposals that were voted received 70% average support, with 31 passing (compared to 57% average support and 8 passing in 2023).
• Proposals advocating for companies to permit or ease the requirements for calling special meetings received higher average support in the 2024 proxy season. While fewer proposals were filed (26 versus 41 in 2023) and voted on (23 versus 37), average support rose to 43%, up from 32% in 2023.
• While far fewer proposals on CEO/chair separation were filed and voted, average support remained unchanged. In 2024, 45 proposals were filed (versus 86 in 2023) and 37 were voted on (versus 79), with average support remaining constant at 30%.
• A proposal asking companies to impose resignation obligations on directors who fail to obtain a majority vote for two years in a row, was rather unsuccessful. Forty of such proposals were filed, but only eight were voted on, with the majority omitted and a relatively low average support of 18%. Similarly, the five proposals aimed at preventing the re-nomination of directors who fail to secure a majority vote in a single year also received relatively low average support (16%).

Building trust and addressing governance concerns through offseason engagement To foster strong investor relationships and address any concerns surrounding the company’s governance framework effectively, companies should maintain an active offseason engagement program. This involves early identification of and transparent communication about potential governance changes or issues, as well as continued education on existing governance policies and practices to prevent misunderstandings. This could help avoid situations where proponents mistakenly request—and investors vote in favor of—changes to a non-existent policy or modifications to a policy that are already in place. Directors can play a crucial role in these conversations by providing insight into board oversight, risk management, and the company’s long-term strategy. By doing so, companies can address investor concerns, build credibility, and lay the groundwork for future voting decisions.

Executive compensation proposals were significantly less successful in the 2024 proxy season

Average support for executive compensation proposals dropped notably, from 22% in the first half of 2023 to 14% during the same period in 2024, with none passing. These proposals were most likely to come to a vote (76%) and least likely to be withdrawn (3%).

• A new category of proposals related to director compensation was introduced this year. Eleven proposals were filed, but only 5 were voted on, with the majority being omitted. This category showed little traction, as reflected in low average support (2%).
• Proposals to limit or vote on severance agreements (“golden parachutes”) saw a decline in both filings and votes. The number of proposals filed dropped from 48 in 2023 to 33, and those voted on from 41 to 30. Average support for these proposals fell to 15%, down from 25% the previous year, and no proposals passed compared to 4 in 2023.
• Proposals aimed at recouping incentive pay (“clawback” provisions) increased. The number of such proposals filed rose from 3 in 2023 to 12, and those voted on increased from 2 to 8. Regardless, average support for clawback proposals fell to 17%, down from 41% in 2023.
• Proposals linking compensation to ESG performance saw somewhat more activity in 2024. The number of proposals filed grew from 4 in 2023 to 9, and those voted on increased from 4 to 7. However, average support remained low, at 8%, compared to 13% in the previous year.

Shareholders filed and voted on more environmental proposals in 2024, but average support fell—yet again

In the first half of 2024, environmental proposals received 18% average support versus 20% during the same period in 2023. Two proposals passed, however, compared to just one proposal last year. Moreover, environmental proposals garnered slightly higher average support than those in other E&S areas (social and HCM).

• Climate-related proposals remained largely stable this year, with 98 filed and 56 voted on, compared to 100 and 57 respectively in the 2023 proxy season. Average support for these proposals was consistent at 20%, with the number of proposals passing rising from one to two.
  • Proposals related to setting science-based goals saw some success, with 14 filed (versus 20 in 2023) and 11 voted on (unchanged), achieving an average support of 26%, up from 21% last year.
  • A new type of proposal focused on clean energy financing ratios at financial institutions also showed promise. Three such proposals were introduced, garnering an average support of 26%, suggesting a growing interest in differentiating between “green” and “brown” energy investments.
  • This area received increased focus from anti-ESG proponents, with 15 proposals filed this year, up from 4 last year.
• On the topic of plastic pollution, there was a slight increase in proposals filed and voted on, but their success rate significantly declined. In 2024, 15 of such proposals were filed (versus 11 in 2023) and 10 were voted on (versus 7), with average support falling to 14% from 25% in 2023.

Other environmental topics, including biodiversity, deforestation, and water usage, saw limited traction, with 2 proposals on biodiversity and 2 on deforestation, both receiving low average support (17% and 5%, respectively), and proposals on water usage being withdrawn altogether.

Assets managers in the hot seat, accused of prioritizing the planet over profits In a recent letter signed by 24 state attorneys general (AGs), 25 asset management firms were called to account for their votes on environmental proposals. The asset managers are alleged to support these proposals without adequately assessing their financial implications, and potentially violating their fiduciary duties by prioritizing environmental policies over shareholder interests. In their letter, the AGs question whether these firms may have outsourced their voting to a third party, such as proxy advisor Institutional Shareholder Services (ISS), which the AGs believe does not perform comprehensive financial analyses. The asset managers in question voted in favor of environmental proposals—and aligned with ISS recommendations—75% of the time, significantly surpassing the market average of 37%. The letter underscores the growing scrutiny asset managers face from regulators, policymakers, and upstream clients, who demand that voting practices be rooted in rigorous financial analysis rather than influenced by (perceived) ideological pressures.

Social proposals went to a vote most frequently in 2024 compared to other E&S areas (environmental and HCM), both in absolute (187) and relative terms (69%)

In 2024, average support for social proposals ticked down to 15%, from 17% in 2023. And as was the case in 2023, one proposal passed.

• In the realm of corporate political activity, the number of proposals going to a vote increased, while average support declined, with 23% average support for 65 proposals in 2024, compared to 27% for 56 proposals in 2023.
  • With an average support of 29%, the 22 proposals addressing traditional lobbying efforts were, on average, more successful than those focusing on political contributions (21% for 32 proposals). Nonetheless, one proposal on political contributions passed.
  • Support for climate-related lobbying efforts saw a decrease in 2024, with average support dropping to 24% (9 proposals) from 34% (10 proposals) in 2023.
  • Proposals related to value congruency lost some traction, with 18% average support (9 proposals) in 2024, down from 26% (11 proposals) in 2023.
• Proposals related to racial equity and civil rights audits saw a significant decline in both filings and votes, with the number of proposals filed dropping from 39 in 2024 to 15 in 2023 and those voted on falling from 25 to 7. Average support remained relatively low, declining slightly from 14% to 13%.
• In the emerging area of AI policies, the number of proposals filed and voted on increased, from 1 to 13 and 1 to 10, respectively. Despite the rise in activity, average support for these proposals held steady at 20%, with the results being influenced by dual voting structures at companies like Alphabet and Meta. In fact, a majority of independent investors supported several proposals at those companies, including a proposal on misinformation and disinformation via generative AI (Alphabet, 56% of independent investors; Meta, 53%) and on a human rights impact assessment (Alphabet, 59%).
• A new topic, addressing the risks of politicized debanking, emerged with 18 proposals filed and 13 voted on. However, these proposals received minimal average support (2%).

In 2024, shareholders filed 119 proposals addressing HCM (up from 108 in 2023) and voted on 80 (up from 60). However, with a drop of 5 percentage points—from 22% in 2023 to 17% in 2024—the decrease in average support was more pronounced than in other E&S areas.

• The 2024 proxy season saw an increased emphasis on diversity-related issues, such as workplace and board diversity and EEO-1 disclosure. The number of proposals filed rose to 48 (from 43 in 2023) and the number of proposals voted on increased to 31 (from 18). At the same time, average support decreased from 17% to 12%. Unlike last year, when companies and proponents were often able to compromise on these proposals, most companies receiving a diversity-related proposal were unable to avoid a vote this year (15 proposals were withdrawn in the first half of 2024, compared to 24 during the same period in 2023). Moreover, diversity has been a growing focus of anti-ESG shareholders who ramped up their proposal activity this year: they filed 13 diversity-related proposals compared to just one in 2023.
• Gender and pay equity have garnered increased attention in 2024, with 20 proposals filed (up from 16 in 2023), and 18 proposals voted on (up from 10). Despite this rise in activity, the average support for these proposals dropped from 33% to 23%.
• In the area of worker rights, the number of proposals filed increased from 12 in 2023 to 14 in 2024, while the number of proposals voted on remained constant at 9. Average support for these proposals decreased from 32% to 23%.
• The number of proposals addressing employee health and safety grew slightly from 14 in 2023 to 15 in 2024, while the number of proposals voted on decreased from 9 to 5. Average support for these proposals also decreased marginally from 24% to 23%.

The 2024 Proxy Season, Set Against the Backdrop of a Federal Election Year, Saw a Rise in Politically Motivated Shareholder Proposals

• In 2024, anti-ESG groups intensified their proposal activity in hot-button areas such as DEI and climate, while progressive proponents continued to push for changes aligned with an opposite agenda. To navigate this polarized environment, with competing and conflicting demands from proponents on both sides of the political aisle, it’s vital for companies to clearly align their positions, decisions, and actions—especially on E&S issues—with their business strategy and maintain a consistent message across all communications and engagements. Corporate leadership should clearly articulate how E&S initiatives contribute to the company’s long-term performance, thereby aligning their strategies with investor interests.

In 2024, anti-ESG proponents filed some 108 proposals versus 91 in 2023, and 88 (or 81%) were voted on versus 65 (71%) in 2023, indicating that it has become harder for companies to negotiate with these proponents. Regardless, average support fell to 2%, from 5% in 2023.

Anti-ESG proponents continue to challenge companies on their social policies and practices (including human rights, racial equity and civil rights audits, the risks of politicized de-banking, and charitable giving), but they have expanded their focus: in the first half of 2024, they submitted 15 climate-related proposals (compared to six during the same period in 2023) and 17 proposals targeting companies’ diversity and equity practices (compared to five in 2023). The only topic where they got traction this year was CEO/board chair separation, a traditional governance topic. Two proposals received an average support of 27%.

Interestingly, even when excluding proposals submitted by anti-ESG proponents, average support declined for executive compensation, social, and HCM proposals, and remained unchanged for environmental proposals. This indicates that the decline in support for certain proposal types reflects a broader shift in investor sentiment.

Contextualizing shareholder proposals: The power of proxy statement disclosures Shareholder proposals can vary widely in scope, with the identity of the proponent often providing clues to the proposal’s significance and intent. Larger (institutional) proponents tend to submit more strategic proposals, whereas smaller proponents more often submit proposals as part of a routine process—or even personal interest— without the same level of strategic intent. To better contextualize the significance and potential negative consequences of the proposal, companies can enhance proxy statement disclosures, for example, by: Providing more details such as the proponent’s name and shareholding size to clarify that the proposal reflects a minority perspective. Sharing (high-level) information regarding the engagement and/or negotiation process, including whether the proponent was willing to engage/negotiate. Creating their own descriptive title for the proposal, rather than relying solely on the proponent’s suggested title, to ensure a more balanced representation—unless the proponent specifically requests that their title be used. Providing specific information on the costs, unintended consequences, and limited benefits of implementing the proposal. Major institutional investors are set to deepen their focus on how corporate leadership manages risks and seizes opportunities to drive long-term value. In this environment, transparent reporting and disclosures will be essential not only for building investor confidence but also for countering the tactics of activist shareholders who are expected to push their agendas into 2025.

Governance Concerns Remain Key Factors Driving Investors to Vote Against Directors

• While directors received strong average support in the 2024 proxy season, governance concerns—particularly regarding board composition, overcommitment, and director independence—remain key drivers for major institutional investors to vote against directors. To sustain support for their board, companies should take a long-term approach to board composition, ensuring that the board has critical core competencies for long-term performance regardless of the challenges of the day. Companies should also take a fresh look at the time commitments expected of their directors and, if they haven’t already done so, consider adopting policies that address the number of boards on which directors can serve.

In the first half of 2024, directors received an average support of 95%, compared to 94% during the same period in 2023. Continuing the trend from previous years, the vast majority (69%) of directors with less than 50% support are on boards of companies with annual revenues under $5 billion, and 89% of those with less than 70% support belong to these boards as well.

Support for board committee chairs remains high—but differences exist

• In 2024, there was a small increase in average support for audit committee chairs (95%, compared to 94% in 2023).
• With 90% average support (compared to 89% in 2023), nominating/governance committee chairs received, yet again, lower levels of support than their committee chair counterparts. Investors continue to target this position due to concerns about companies’ governance practices and E&S initiatives—or perceived lack thereof.
• Average support for compensation committee chairs remained unchanged at 93%, but fewer failed to get re-elected in 2024 (4 versus 12 in 2023). Regardless, investors continue to couple concerns relating to executive compensation programs with director elections. For example, Figure 16 shows that low shareholder support for companies’ say-on-pay proposals is translating into ever-lower support for the board’s compensation committee chair. In the 2021 proxy season, compensation committee chairs at S&P 500 companies where the say-on-pay vote received less than 50% support (i.e., failed), received 83% support—11 percentage points lower than the 94% average support for all compensation committee chairs that season. In 2024, average support for chairs at companies with failed say-on-pay votes dropped to 70%—24 percentage points lower than the overall average (94%).

Boards withstand proxy fights, despite the universal proxy While the universal proxy has made it easier for activist investors to nominate dissident directors, almost all companies entangled in a proxy fight in the 2024 proxy season, including The Walt Disney Company, were able to successfully fend off activists. Only at railroad company Norfolk Southern Corporation, activist investor Ancora Catalyst Institutional managed to win three (out of 13) board seats but fell short of gaining majority control of the board and replacing the company’s CEO. Regardless of whether they are facing a proxy fight, all companies should regularly assess their directors’ qualifications and related disclosures, including the skills matrix. Investors should have a clear understanding the distinct value each director brings to the board as well as how the mix of skills and experiences contributes to effective oversight of the company’s strategy and risk management for long-term value.

Say-on-pay Sees Rising Support

• The 2024 season saw an uptick in average support for say-on-pay, reflecting better compensation program disclosures and greater alignment between executive pay and companies’ long-term financial returns. Regardless, companies engaging in controversial pay practices, including outsized compensation awards, one-time grants that lack a compelling rationale, disconnects between compensation and financial performance, or an unclear connection between program design and corporate strategy, will face an uphill battle in justifying their decisions to investors.

More companies received over 90% support (72% in 2024 versus 70% in 2023) and fewer companies failed to receive majority support (1% versus 2%). And as was the case with director elections, the majority (74%) of companies that received less than 50% support have annual revenues under $5 billion.