'Continued engagement,' proxy season 2013 theme.

• Author: Heffes, Ellen M.
• Position: GOVERNANCE - Proxy voting

The overarching theme for the 2013 proxy season, "continued engagement," is manifesting itself as increased company attention to governance activity and investors. In fact, as Ernst & Young reports in its annual proxy season review, 55 percent of companies are disclosing engagement with investors--up from 38 percent in 2012--indicating investor influence over governance practices is growing.

"Investors are continuing to demand accountability, transparency and access, and many management teams and boards are showing a greater willingness to have that dialogue. At the same time, some larger investors are making clear that their proxy voting decisions are the result of independent evaluations," says Allie Rutherford, director of the Corporate Governance Center at E&Y. As this governance landscape evolves, she adds, "Companies may find it pays to maintain constructive ongoing relationships with key shareholders."

During this year's proxy season, E&Y found 10 corporate governance trends:

1 Shareholder Proposal Submissions Increased. Among the top five shareholder proposal topics are targeted executive compensation practices; political spending/ lobbing activity; environmental sustainability; annual director elections; and independent board chairs.

2 Board Leadership Structure Debate Continues. Investors continue to push for independent board chairs, submitting a record number of shareholder proposals on the topic, though average support for these proposals declined this year to 31 percent from 36 percent in 2012.

3 Diversity Remains a Priority, and Beard Turnover Under Scrutiny. The slow pace of change in gender diversity--women represent 15 percent of directors on S&P 1500 boards, up from 12 percent in 2012 and 11 percent in 2006--is generating renewed discussion of board turnover, since the lack of turnover is thought to be one of the greatest obstacles to increasing diversity.

4 Directors Receive Increasing Support. Opposition to director elections continues to trend downward, as just 4 percent of directors this year have received opposition exceeding 20 percent of votes cast.

5 Environmental and Social Topics Dominate Shareholder Proposals (nearly 40 percent of all proposals). The top three shareholder proposal topics are political spending/lobbying; general corporate sustainability and climate change-related reporting (including supplier-issued...