A Comparison of Silicon Valley Public Companies and the Large Public Companies of the S&P 100

This comprehensive report covers trends in stockholder voting at annual meetings in the 2018 proxy season among the technology and life sciences companies included in the Fenwick Silicon Valley 150 Index (SV 150) and the public companies included in the Standard & Poor’s 100 Index (S&P 100).

In the 2018 proxy season, 143 of the SV 150 companies and 99 of the S&P 100 companies held annual meetings that included voting for the election of directors, ratifying the selection of auditors of the company’s financial statements and voting on executive officer compensation (“say-on-pay”).

Annual Meeting Participation

  • An average of approximately 89.1% of shares of SV 150 companies was represented in person or by proxy at company annual meetings during the 2018 proxy season, similar to 2016. However, in addition to the approximately 10.9% not represented, an additional 14.5% were represented via proxy by brokers who did not receive instructions on voting for the bulk of matters for which broker discretionary voting is not permitted. This compares to 12.8% not represented and 13.9% broker non-votes in the S&P 100 in the same period.
  • The ranges of representation and voting, though, were somewhat broader in the SV 150 than the S&P 100 (e.g., 52.9%–100% voting in the SV 150, compared to 71.3% – 93.9% voting in the S&P 100).

Director Elections

  • In the vast majority of cases, the elections of directors continue to be uncontested. One of the SV 150 companies and two of the S&P 100 companies had a contested election at its annual meeting in the 2018 proxy season (compared to one each in 2017 and none in S&P 100 in 2017).
  • In the SV 150, the dissident stockholder was able to elect two of the three candidates sought.
  • In the S&P 100, the dissident was able to have its candidate appointed after very narrowly losing the stockholder vote at Procter & Gamble, and Broadcom was forced to withdraw its slate at the 11th hour following CFIUS review.

Say-on-Pay

  • Opposition to named executive officer compensation reached 15% or more of votes cast (ignoring abstentions and broker non-votes) at 22.8% of SV 150 companies (compared to 13.8% of S&P 100 companies). Within those SV 150 companies with relatively lower levels of support, opposition reached 30% or more at 15 companies (of which nine had opposition of 40% or more, including seven companies where opposition exceeded 50%).

Other Proposals Voted On

  • Setting aside director elections, say-on-pay (as well as say-on-frequency) and auditor approval voting, stockholders at SV 150 companies were asked to vote on one other matter on average, while stockholders at S&P 100 companies averaged 2.5 other matters voted on. The difference is primarily driven by the fact that stockholder proposals are primarily a large company phenomenon. There were only four such proposals voted on by stockholders outside of the top 50 companies in the SV 150.

Company Proposals

  • Excluding director elections, say-on-pay (as well as say-on-frequency) and auditor approval voting, stockholders at SV 150 companies voted on 86 company-sponsored proposals in the 2018 proxy season, primarily in compensation-related subjects, as well as some governance matters (compared to 56 such proposals at S&P 100 companies).

Stockholder Proposals

  • The stockholder-sponsored proposals voted on in the SV 150 generally focused on governance matters or policy issues (this was also true in the S&P 100).
  • The average support for stockholder-sponsored proposals was approximately 31.9% at the SV 150 companies (compared to approximately 27.3% at S&P 100 companies).
  • The most common topic for stockholder-sponsored proposals in the SV 150 were proxy access (eight proposals, two of which succeeded) and anti-discrimination/diversity (eight proposals, none of which were successful).
  • The most common such topic in the S&P 100 was regarding political/lobbying activities (31 proposals, none of which succeeded).