As You Vote Releases New 2024 ESG-Aligned Proxy Voting Guidelines
New policy recommends votes against all board directors that bypass SEC to sue shareholders
FOR IMMEDIATE RELEASE
Media Contact: Sophia Wilson, [email protected], (341) 600-1832
BERKELEY, CALIFORNIA—APRIL 1, 2024—Today, As You Sow and Proxy Impact released the As You Vote 2024 Proxy Voting Guidelines, a leading resource for investors who want to follow an ESG-aligned voting policy for long-term sustainable growth. As You Vote provides this ESG proxy voting policy for institutional investors through the Broadridge Proxy Edge platform, for individual investors through Iconik, and for mutual fund and ETF pass-thru with Tumelo.
First released in 2015, these ESG-based Guidelines raise the bar for voting on key shareholder concerns such as climate change, racial justice, board accountability, shareholder rights, and executive compensation. For instance, this year’s Guidelines recommend a vote against board nominating committees unless the board has a 40% minimum racial and/or ethnic diversity and a 50% gender balance. Also of note is a new policy to vote against the entire board if the company bypasses the SEC no-action process and instead first challenges a resolution through litigation.
“The SEC ‘No Action’ process has been refined over decades to enable a company to effectively challenge a shareholder resolution by filing a letter with the agency asking for permission to take no-action, in other words, leave it off the proxy ballot,” said Andrew Behar, CEO of As You Sow. “If the challenge is successful, the proposal is omitted from their proxy. This year, ExxonMobil has taken the extraordinary step of bypassing the SEC process and suing shareholders for filing a climate-related resolution – in what can only be viewed as an attempt to intimidate shareholder proponents and suppress shareholder rights.”
The Guidelines also take a strong stand on executive compensation with recommendations to vote against CEO pay that is greater than the 75th percentile of company peers. Such a high level of pay is viewed as artificially inflated, often due to the common practice of basing executive compensation on peer-to-peer comparisons instead of company performance.
Unlike other CEO pay guidelines, As You Vote applies a 100:1 CEO-to-typical worker pay ratio guideline, which translates into voting against 80% of Say-on-Pay ballot items. In 1978, the CEO-to-typical-worker pay ratio was 31:1, and by 2022 it had increased to 334:1. Over this same time, worker pay has basically been stagnant while CEO pay has increased by 1,209%.
“We recommend a vote against the compensation committee for any CEO making more in a year than the company’s typical worker would earn in a century,” said Michael Passoff, CEO of Proxy Impact. “Increases in executive pay have far exceeded stock performance and worker pay. Pay disparity contributes to the destabilizing effects of income inequality and distorts incentives, leading to a short-term focus rather than an emphasis on long-term, sustainable growth.”
The 2024 Guidelines also address new shareholder resolutions that are described in the annual Proxy Preview, which reports on over 525 ESG resolutions submitted by shareholders. Proposals filed this year have climate risk and the environment as their chief concern, closely followed by social issues including corporate political influence, workplace diversity, equity, inclusion, human rights, and labor rights. New resolutions on biodiversity loss, the Rights of Nature, and artificial intelligence are also covered in the Guidelines. As You Vote recommends voting For these resolutions.
As You Vote recommendations are in stark contrast to other ESG-aligned policies. In 2022 As You Vote recommended against approximately 80% of CEO Pay packages with corresponding votes against the board compensation committee. As You Votes’ emphasis on holding board committee members accountable resulted in 70% votes against board members. ISS-SRI and Glass Lewis-ESG policies resulted in almost exactly opposite votes, recommending approximately 80% of CEO pay packages and 70-80% of directors. In addition, As You Vote recommends voting for climate resolutions that ask for quantitative GHG emissions reduction targets while other policies often will not support calls for Scope 1, 2, and 2 emissions data.
“The major difference between As You Vote’s Proxy Voting Guidelines and what other services market as ESG policies is that they reflect concerns and priorities important for investors and asset managers, making As You Vote a necessary option for pass-through voting of the mutual funds and ETFs in their retirement plans,” said Behar.
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As You Vote provides environmental. social and sustainable governance (ESG)-aligned proxy guidelines and voting services to institutional investors through the Broadridge Proxy Edge platform, for individual investors through Iconik, and for mutual fund and ETF pass-thru with Tumelo. Fees support shareholder advocacy on climate risk, social justice, human rights, and other critical issues
As You Sow is the nation’s leading shareholder representative, with a 30-year track record promoting environmental and social corporate responsibility and advancing values-aligned investing. Its issue areas include climate change, ocean plastics, pesticides, racial justice, workplace diversity, and executive compensation. Click here for As You Sow’s shareholder resolution tracker.
Proxy Impact provides shareholder advocacy and proxy voting services that promote sustainable and responsible business practices. Its Women’s Inclusion Project engages companies on issues of gender and racial pay gaps, board diversity, workplace diversity, child labor and child sexual exploitation online. Other issues include climate change and corporate lobbying.