Fenwick & West has released its 2018 report on proxy season results in SV 150 and S&P 100 companies, which highlighted changes in director approval ratings, “say on pay” voting and stockholder proposals.

David Bell, the Fenwick partner who authored the report, said 2018's support for director stats stood out to him.

“Support for director elections tightened up this year compared to prior years. The difference between the S&P 100 and SV150 became very small, maybe half a percent in the difference in the average percentage that both directors got. That had been a little wider last year,” he said.

But there is division when it comes to “say on pay” voting. In 2018, opposition to named executive officer compensation reached or exceeded 15 percent of the board's votes cast in more than one-fifth of SV 150 companies, compared to 13.8 percent of S&P 100 companies.

When more than 15 percent are “against,” Bell said, “that's a wake-up call for those companies.”

He added that this opposition can stem from poor market performance, revenue decreases or board members who feel that compensation isn't adequately tied to performance.

“To observers on the outside, it appears that stock performance is the biggest driver in how year to year changes in voting take place at individual companies around 'say on pay,'” Bell said. “Most companies do 'say on pay' annually, although in the SV 150 there are a decent amount of companies that do it every three years.”

Companies often recommend the annual “say on pay” structure in the wake of the Dodd–Frank Wall Street Reform and Consumer Protection Act, Bell noted. But some see compensation as a long-term decision, meaning a three-year vote is more appealing.

“For companies who think maybe three years is a more appropriate time frame, there are stockholders out there that support that,” he said.

The past year also saw an increase in shareholder proposals, especially around diversity and anti-discrimination. There were eight such proposals in the SV 150. While none of them successfully passed, the average percent of votes cast for diversity proposals more than doubled, up to 34.3 percent.

Bell said that it's rare for such a proposal to pass—almost no policy issues on any category passed—but the fact that there are more proposals with increasing support is a sign of change.

Even if they don't pass, Bell noted that efforts to get such proposals passed “will often change behavior at companies,” with or without a policy in place.