RiskMetrics Group—a significant source of proxy voting guidance for institutional investors—has published its Preliminary U.S. Postseason Report for the 2008 proxy season. The report indicates that before the most recent proxy season, analysts were predicting increases in “shareholder discontent.” Shareholders were expected to increasingly withhold votes for incumbent directors; however, this did not happen, and RiskMetrics blames the bear market.

It seems in times of capital market downturns, shareholders prefer to support management. RiskMetrics reports that most directors were elected with strong support in 2008, and there was only slightly increased support for say on pay proposals.

Certain “activist investors” as labeled by RiskMetrics, also chose not to pursue “vote no” campaigns against boards of struggling financial firms, and most boards received strong support in 2008 (based on voting percentages). These results could mean shareholders do not blame directors for the current market (with the exception of Washington Mutual where 9 directors received over 29% opposition).

If the current market is responsible for increased support for the company’s slate of directors, it could suggest that shareholders collectively understand there is some economic “cost” associated with installing new directors, even when the current directors are thought to be under-performing. One theory is that the costs of replacing poor-performing directors with new directors are higher in a struggling market.