The 2013 proxy season lacked much of the drama many had predicted and support for shareholder initiatives didn't muster much traction, says Glass Lewis in an analysis of shareholder proposals released this week. It was notable, however, that environmental and social issues continued to gain traction, and there was an increased push for disclosures of political spending.

“On the heels of Occupy Wall Street, heated debates regarding regulations on political spending in the United States, and a European directive concerning board gender diversity, the 2013 proxy season was poised to be defined by vocal shareholders holding companies accountable for recent missteps,” Glass Lewis wrote. “However, that scenario never came to be; the 2013 proxy season did not result in a ‘shareholder spring,' and in fact was (relatively speaking) free of excessive drama and fireworks.”

This may be the result of improved market conditions, better corporate performance, or improved disclosure and transparency, the firm speculates. Regardless of the reason, average support for most shareholder initiatives continued to decrease, as it has over the last several years. For example, after a heated, public debate regarding the merits of appointing an independent chairman of the board at JPMorgan Chase, support for the initiative decreased significantly relative to 2012.

Support for another shareholder proposal requesting that Urban Outfitters consider women and minorities similarly decreased after the firm appointed a female – “even though she was a long-tenured employee of the company and also happened to be the wife of the president, CEO, chairman and co-founder of the firm,” the firm wrote. Proponents of the shareholder proposal called this a “cynical,” insulting and “bogus” move. Despite the uproar, however, shareholder support for the initiative fell year-over-year.

While shareholder support for many initiatives decreased over the past year, support rose for some environmental and social issues. In 2012, only one proposal regarding environmental or social issues received majority support (a proposal requesting disclosure of Wellcare Health Plans' political spending. In 2013 three such proposals received majority support. It was noted, however, that all three proposals (requesting a sustainability report, political contributions disclosure, and consideration for board gender diversity when nominating new directors) were proposed and approved by shareholders at one company: CF Industries Holdings.

For the third year in a row, shareholder proposals calling for increased disclosure on companies' lobbying activities and political contributions were the most frequent proposals reviewed by Glass Lewis. Prior to 2011, governance issues, such as declassification of the board or the adoption of a majority voting standard, were the most commonly submitted proposals.

“Investors are increasingly focusing on potential reputational risks, such as those associated with companies' political involvement,” the firm wrote. “In response, we have noted widespread, rapidly improving disclosure on this issue.” However, “likely as a result of companies' responsiveness and improved transparency,” average shareholder support for these proposals has declined year-over-year.

Another reason for the overall decrease in support for many shareholder initiatives in 2013, according to Glass Lewis, is that the adoption of many of these provisions and structures resulted in less of a need for shareholder activism. For example, according to the 2012 Spencer Stuart Board Index, 83 percent of companies in the S&P 500 have a declassified board structure and 84 percent have adopted majority voting in director elections.

A “growing movement toward corporate engagement” was also noted. “Oftentimes direct engagement between investors and companies is a much more straightforward, effective and ultimately fruitful method of effecting corporate change,” wrote, adding that “the vast majority of these engagements are confidential, it is difficult to measure the magnitude or effect of this movement on broader governance trends.”

Glass Lewis clients can access this report here. All others can send a request to info@glasslewis.com.

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