In an article for The Deal, White & Case partners Morton Pierce, James Hu and Maia Gez examine whether the US Securities and Exchange Commission's new universal proxy card rules will lead to an uptick in nonbinding shareholder proposals to public companies from "proposal activists" predominantly focused on ESG-related issues.
Hu notes that, "Despite the universal proxy card system…small investors that traditionally submitted ESG-related shareholder proposals will face meaningful hurdles in getting directors elected even though they fared well with shareholder proposals."
Pierce states that, to win a proxy contest, nominating shareholders will need a lot of support: "You need an executive search firm, a proxy solicitor, lawyers, you have to have a real serious commitment to win…You need to make the case that change is necessary and that your candidates are the right ones to implement change."
The piece notes that, overall, anti-ESG activists may be less likely to launch director contests at this time. "The anti-ESG shareholder proposals are more nascent," said Gez. "They have less leverage against companies this year."
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