Shareholder Proposal Developments During the 2024 Proxy Season

July 29, 2024

This update provides an overview of shareholder proposals submitted to public companies during the 2024 proxy season,[1] including statistics and notable decisions from the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) on no-action requests.[2]

I. Summary of Top Shareholder Proposal Takeaways from the 2024 Proxy Season

As discussed in further detail below, based on the results of the 2024 proxy season, there are several key takeaways to consider for the coming year:

Shareholder proposal submissions rose yet again. For the fourth year in a row, the number of proposals submitted increased. In 2024, the number of proposals increased by 4% to 929—the highest number of shareholder proposal submissions since 2015.
The number of governance and social proposals increased, while civic engagement and environmental proposals decreased. Governance proposals increased notably, up 13% from 2023, with the increase largely attributable to proposals related to the adoption of prescriptive majority voting director resignation bylaws. The number of social proposals also increased, up 4% compared to 2023. In contrast, civic engagement and environmental proposals declined 10% and 4%, respectively. The five most popular proposal topics in 2024, representing 34% of all shareholder proposal submissions, were (i) climate change, (ii) nondiscrimination and diversity-related, (iii) simple majority vote, (iv) director resignation bylaws, and (v) independent chair. Of the five most popular topics in 2024, all but two were also in the top five in 2023 (simple majority vote and director resignation bylaws replaced shareholder approval of certain severance agreements and special meetings).
The no-action request volumes and outcomes appear to have reverted to pre-2022 norms, with the number of no-action requests increasing significantly and the percentage of proposals excluded pursuant to a no-action request continuing to rebound from 2022’s historic low. There were 267 no-action requests submitted to the Staff in 2024, representing a submission rate of 29%, up significantly from a submission rate of 20% in 2023 and consistent with a submission rate of 29% in 2022. The overall success rate for no-action requests, after plummeting to only 38% in 2022, continued to rebound in 2024, with a success rate of 68%, compared to a success rate of 58% in 2023. Success rates in 2024 improved for resubmission, violation of law, ordinary business, and substantial implementation grounds, while success rates declined for procedural and duplicate proposal grounds.
The number of proposals voted on increased yet again, but overall voting support remained at historically low levels, and only 4% of proposals submitted received majority support. In 2024, over 55% of all proposals submitted were voted on, compared with 54% of submitted proposals voted on in 2023. Average support across all shareholder proposals was 23.0%, roughly level with average support of 23.3% in 2023 and the lowest average support in over a decade. Average support for governance proposals increased from 2023, while overall support for both environmental and social proposals declined. In both cases, the decline appears to have been driven by the submission of proposals that are overly prescriptive or not particularly germane to a company’s core operations and the low voting support for proposals that challenged companies’ focus on certain ESG-related policies and practices. While the number of shareholder proposals that received majority support increased to 39 in 2024, up from 25 in 2023, majority-supported proposals still represented only 4% of proposals submitted, up slightly from 3% in 2023.
Anti-ESG proposals proliferated in 2024, but shareholder support was low. The 2024 proxy season saw a continued rise in the use of the Rule 14a-8 process by proponents critical of corporate initiatives or corporate leadership that they view as inappropriately involved in environmental, social or political agenda (referred to as “anti-ESG” proposals). This year, 107 proposals were submitted by anti-ESG proponents, on topics ranging from traditional corporate governance matters to proposals challenging companies’ diversity, equity and inclusion programs and opposing efforts to reduce greenhouse gas emissions. Of the proposals submitted by anti-ESG proponents, 78 were voted on, receiving average support of 2.4%. Notably, no anti-ESG proposal received more than 10% support.
With SEC amendments to Rule 14a-8 and legislative reform efforts stalled, stakeholder challenges to the SEC’s role in the shareholder proposal process foment uncertainty. In July 2022 the SEC proposed amendments to Rule 14a-8 to significantly narrow key substantive bases that companies use to exclude shareholder proposals on substantial implementation, duplication, and resubmission grounds remain stalled. At the same time, after a flurry of activity in July 2023, the Republican ESG Working Group formed by the Chair of the Financial Services Committee of the U.S. House of Representatives appears to have stalled in its efforts to reform the Rule 14a-8 no-action request process. However, ongoing legal action by two stakeholder groups (the National Center for Public Policy Research (“NCPPR”) and the National Association of Manufacturers (“NAM”)), and Exxon Mobil Corp.’s legal challenge to a proposal, as well as recent Supreme Court decisions that could further invigorate challenges to the SEC’s authority to adopt Rule 14a-8, signal that uncertainty about the shareholder proposal process and the SEC staff’s role in adjudicating Rule 14a-8 no-action requests will persist.
Proponents and third parties continue to use exempt solicitations to advance their agendas. Exempt solicitation filings remained at record levels, with the number of filings reaching a record high again this year—up over 69% compared to 2021. As in prior years, the vast majority of exempt solicitation filings in 2024 were filed by shareholder proponents on a voluntary basis—i.e., outside of the intended scope of the SEC’s rules—in order to draw attention and publicity to pending shareholder proposals. Continuing a trend first noted last year, third parties are intervening in the shareholder proposal process by using exempt solicitation filings to provide their views on shareholder proposals submitted by unaffiliated shareholder proponents. In addition, some third parties have used exempt solicitation filings to disseminate their general views on social or governance topics beyond those raised by a specific shareholder proposal.

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[1] Analyses of shareholder proposals and no-action letters often varies depending on the time period covered, data sources, and other factors. Please see footnote 3 for additional information on our methodology.

[2] Gibson, Dunn & Crutcher LLP assisted companies in submitting the shareholder proposal no-action requests discussed in this update that are marked with an asterisk (*).

The following Gibson Dunn attorneys assisted in preparing this update: Aaron Briggs, Elizabeth Ising, Julia Lapitskaya, Ronald O. Mueller, Michael Titera, Lori Zyskowski, Geoffrey Walter, Victor Twu, Natalie Abshez, Meghan Sherley, Nicholas Whetstone, Chad Kang, Nathan Marak, Antony Nguyen, and Jack Strachan.

Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, or any of the following lawyers in the firm’s Securities Regulation and Corporate Governance practice group:

Aaron Briggs – San Francisco, CA (+1 415-393-8297, [email protected])
Elizabeth Ising – Washington, D.C. (+1 202-955-8287, [email protected])
Thomas J. Kim – Washington, D.C. (+1 202-887-3550, [email protected])
Julia Lapitskaya – New York, NY (+1 212-351-2354, [email protected])
Ronald O. Mueller – Washington, D.C. (+1 202-955-8671, [email protected])
Michael Titera – Orange County, CA (+1 949-451-4365, [email protected])
Lori Zyskowski – New York, NY (+1 212-351-2309, [email protected])
Geoffrey E. Walter – Washington, D.C. (+1 202-887-3749, [email protected])
David Korvin – Washington, D.C. (+1 202-887-3679, [email protected])

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