Five Developments To Follow In 2014 - Shareholder Proposals And Director Election

Shareholder proposals are a staple of annual shareholders meetings. In the U.S. and Canada, proposals are mainly made by labour-affiliated investors, individual activists, and social-, policy- or religious- oriented investors. They cover a wide range of topics from corporate governance to corporate social responsibility.

In 2013, in the U.S., the most common topics dealt with political contributions and lobbying, board declassification and independent chairs. In Canada, compensation issues, such as say-on-pay or limiting CEO compensation, consisted of more than half the proposals in 2013.

According to U.S. and Canadian corporate law, the board of directors manages the business and affairs of a corporation. Shareholder proposals can only be presented as recommendations. Thus, a board of directors is not legally compelled to implement a proposal that is approved by a majority of shareholders.