ARE ACTIVISTS WINNING MORE PROXY FIGHTS?

Companies with activist investors or companies that may have ongoing governance or performance issues need to be aware of shareholder voting trends. For companies that may be at risk for proxy battles, this need for information is even more vital. With that in mind, issuers are taking the question of whether activists are likely to succeed in their battles for seats or even control of boards more seriously than ever. Which leads us to ask the question: Are activists winning more proxy fights or is this merely a matter of perception? The answer seems to be yes, they are winning more fights, and for a variety of reasons.

Outside Influences

Economic Factors

To better understand why issuers are asking this question, it is best to revisit the current environment surrounding the choices that shareholders face when deciding whether to support management or outside groups with their votes. Traditionally, in times of greater economic growth, activists face greater resistance from shareholders. This is due to the general attitude that, if the company and shareholders are making money, shareholders are less likely to rock the boat. This seems true, even in cases where a company might be underperforming peers, so long as there is at least some positive growth in share value. In cases where a company is performing well, or, at least not underperforming, arguments for board seats due to governance issues, such as a lack of responsiveness to shareholders, will frequently fall on deaf ears even at well targeted companies. However, in times of economic downturn where companies may have long periods of stagnant returns, activist arguments are more likely to find fertile ground. This is true whether those arguments stem from financial or governance issues (or both), but are particularly potent at companies where peer group financial performance exceeds that of the company.

These trends seem particularly true in recent years. Not only has the general recovery in the stock market and overall economy slowed, but those companies that offer third party recommendations to shareholders, such as Institutional Shareholder Services (ISS) and Glass Lewis, have been less reticent to recommend that shareholders support activist nominees. Consider; in the past few years (since the economic downturn, really), ISS has supported dissidents approximately two-thirds of the time, if you include partial slate recommendations. This means that ISS and other proxy advisory services are recommending shareholders vote for at least one dissident nominee at those proxy fights. Combine this with the fact that, as mentioned earlier, we are in a part of the economic cycle where shareholders are generally more inclined to vote against management, and we have a situation that may feel like an uphill battle to those in management positions seeking to retain control at their companies.

It should also be noted that an additional advantage that activists and hedge funds enjoy, in the current regulatory environment, is the ability to easily borrow shares and voting rights from other investors. In some cases this can result in dissident shareholders that wield a disproportionate number of votes to their direct economic interest. As a result dissident shareholders may influence overall votes with more effect than if they were to be limited to a “one share, one vote” system.

More Comprehensive Strategies

Another trend that has increased the success of dissidents, which has been noted elsewhere and we at Eagle Rock have seen first-hand; the trend for activists to offer more detailed plans for the company’s long term strategy and seek a more active role in steering the company going forward. This trend has undercut a number of traditional arguments that issuers have used to fight off dissidents before, as well as defying long held beliefs by investors regarding the goals of dissidents. In particular, these strategic arguments undermine the notion that these activists are short term investors with short term goals. Detailed long term strategic plans put forward by dissidents make it harder to portray a hedge fund or other activist investor as just another outsider out to make a quick buck at the expense of the company’s long term financial health.

Benefits of Activism

One final trend that is largely ignored by company advocates and companies themselves when fighting off dissident shareholders is that recent studies have indicated that activists generally increase shareholder wealth. However, statistics in isolation from context can be misleading. As with many statistical studies, underlying causes are frequently ignored, while taking note of a correlation. In this particular case, there are likely numerous causes. Companies and their advocates can argue that activists frequently target companies that are currently undervalued even without the strategy changes that activists might suggest. In addition, companies frequently adopt some or all of the dissident ideas… in some cases it may take an outside voice to provide the impetus a company needs to unlock value hidden in a company.

What Should Companies Do?

While every company will have different responses to activist investors, there are some activities that companies can engage in that will reduce the chances of successful challenges to management. Just like the best way to avoid serious health problems is to engage in preventative actions prior to problems arising, so too can companies engage in preventative strategies. First among these strategies is to engage shareholders before specific problems with investors arise. Companies should actively set out to engage shareholders as much as possible. This means a year round effort, rather than a last minute reaction in response to a specific problem or proposal. Shareholders that feel that a board and management are already responsive to their needs will be much less likely to vote against them. This is particularly true in cases where an activist investor can be portrayed as a relative newcomer. Most companies should at least consider this beefed up version of investor relations, if the resources are there. However, even in cases of scarce resources, certain companies should consider this to be a high priority item. Of particular note are companies with a history of activist shareholders, such as companies that have been targeted before, whether in the form of a proxy contest or in the form of shareholder proposals. For instance, if a company has had high support for a shareholder proposal that the board and/or management has chosen not to act on, communicating clearly with shareholders as to the reason why no action was taken is increasingly important. Frequently a company will provide their reason for opposing a proposal in the proxy statement and consider the matter adequately addressed. In years past this may have been sufficient for the majority of issues. That is not the case anymore, and a company ignores these proposals at their peril. Another instance where a company should consider a more active shareholder outreach are those that have seen challenges with economic conditions or compare unfavorably with peers in share price performance. While share price may not always be the best way to judge the health of a company, it will always be a primary concern for shareholders.

Who Are Your Holders?

In addition, companies should engage in periodic reviews of their shareholder profile. Proxy solicitors are a good source of information in this regard. Solicitors can look at the overall makeup of those holding shares in a company and give a reasonable snapshot of who is investing in the company and what their various stances are in regards to activism as well as their likelihood of supporting activists who do come to the company later on. Solicitors have the background to understand where certain investors keep their shares, even when those positions might not be apparent to the casual observer. Whether a company uses a solicitor or another outside specialist, developing and maintaining an accurate view of a company’s shareholder base is an important step in determining your investor relation needs.

Triage

Finally, if all else has failed and a company is facing a proxy fight, a company must determine its response. There are really two options: Fight or Deal. Increasingly, companies facing a proxy battle have been choosing the latter. This is due to a variety of factors, many of which have been mentioned above, such as high levels of support by proxy advisors, poor economic trends and detailed strategic plans offered by the activist. Dealing with an activist can offer advantages. Foremost of these is the reduction in uncertainty. If the fight goes to the shareholders, worst case scenario from the management perspective is that the activists could gain full control of the board if their entire slate is elected (and the board is elected annually.) That is a lot of uncertainty. Even if this outcome is unlikely, boards frequently find that limiting the possibility is worth the sacrifice of some board representation. In some cases, these deals are actually fairly good at creating shareholder value. This usually depends on the strategic plan being offered by the activists, the reputation that those activists might enjoy, as well as a variety of other conditions. Another advantage offered by this approach is that it will also reduce the cost of a contested election, which can be significantly more than a regular annual meeting. While this cost may be incremental to a larger company, it is not inconsiderable to small and medium sized companies and activists will also be more than happy to save the money, giving them an incentive to come to the table as well. Regardless of a company’s specific choice with regard to how to deal with a proxy fight when faced with one, it is important to keep in mind: The company that has engaged in good preventative investor health is most likely to survive intact, and will always have more bargaining power with activists and shareholders in general, regardless of current economic conditions.

LETTERS TO SEC REGARDING NYSE PROXY FEES

The Securities Transfer Association addressed letters today to SEC Commissioners Aguilar, Gallagher and Paredes calling on them to reject the  NYSE Proposed Rule - Proxy Fees (SR-NYSE-2012-39).  The letter cites a number of failures of the NYSE Proxy Fee Committee including failing to have an independent analysis of the actual costs of street proxy distribution conducted, failing to review rebates given to brokers by Broadridge and a lack of analysis of the inappropriate processing fees charged on WRAP and SMA accounts that do not require processing.  The STA recommended that the commissioners reject the NYSE filing and be required to conduct a rigorous independent analysis of the actual costs as recommended by earlier NYSE Proxy committees.

You can view/download copies of the letters here:

Letter to Commissioner Aguilar

Letter to Commissioners Gallagher and Paredes

11/1 WEBINAR REPLAY

VIEW THE REPLAY, DOWNLOAD THE PRESENTATION, AND MORE

To view a replay of the presentation, CLICK HERE

To download the Powerpoint presentation file, CLICK HERE

Additionally, here is a related bulletin posted at wallerlaw.com:
COMPENSATION COMMITTEES AND THE STRICTER STANDARDS OF INDEPENDENCE UNDER SEC RULES AND THE INTERNAL REVENUE CODE

PREPARING FOR THE 2013 PROXY SEASON

Summer is over. If the cooling temperatures and shorter days weren't enough to notice, simply look to the increasingly numerous publications (like this one) regarding both 2012 proxy season post mortems and 2013 information on issuer and investor preferences and lessons to be carried forward. As it is that time of year, we’ll attempt to give an overview of issuer and investor concerns and a framework of how to make sense of the information that is so dense this time of year.

Of the major publications to come out this time of year, perhaps most notable is the yearly Institutional Shareholder Services (ISS) Policy Survey of investors and issuers, regarding major corporate governance issues, which will provide the bones of the framework for understanding governance issues going forward and affecting shareholder meetings for 2013. The survey represents a wide spectrum of views and offers a fairly comprehensive snapshot of sentiment regarding corporate governance, both in the US and from a global perspective. The focus of this article will be on domestic corporate governance policy.

Executive Compensation Issues Remain Top Focus

As with last year, compensation was the number one focus across the globe as well as in North America. This concern held true for both issuers and investors. While discussion of executive compensation as a general "concern" can seem like an overly simplistic view of a very complex issue, it is important to take note of the historical positions of each side (investor and issuer, also simplistic terms) to better understand how the current positions generally held should be interpreted. As many familiar with the topic will know, investors have generally led the charge for both more disclosure and more accountability from issuers and boards, both in terms of the decision making process involved and the end result of better connections between pay and performance for executives. This has at times been a contentious process with serious disagreements between both sides. This also informs the understanding of the snapshot provided by surveys like the ISS Policy Survey, allowing us to appreciate the issues that both sides agree on, as well as the ones that remain contentious.

With that in mind, it is illustrative to note that of the six major subjects of the summary results from the Policy Survey regarding compensation, investors and issuers agree as to some aspect of the importance of four of them. While this did not represent total agreement on thresholds and specific numbers, it is an acknowledgement that both parties recognize the importance of similar issues, which has not always been the case. This may even understate the case, as some survey questions related to when a company should be targeted by investors, which is something on which investors will likely always be more aggressive.

Size Matters to Both Parties

Of the four issues, the most uniform agreement is on the size of companies used in the peer groups that a company uses to determine its relative pay. Both sides agree overwhelmingly that the size of peer companies matters. Both sides agreed that a company’s peers should be within a specified size range compared to the company and that the company should be close in median size compared to the peers selected within that range. Issuers and investors also agreed that the peers should be within the company’s selected GICS (or industry) peer group and the ISS-selected peer has chosen the target company as a peer (although this last is significantly more important to issuers than to investors.) We note that, not surprisingly, investors were less likely to place importance on whether or not ISS (or any proxy advisor) used the company’s pre-selected peers, while most issuers felt that ISS should use the company’s peer group without exception. This last point, however, is likely more a disagreement as to the place of proxy advisors and other independent third parties in the process of peer selection than a true disagreement in the process in which peers should be selected. Regardless of a company's perspective on the role of third parties in peer formulation, keeping track of peers used by proxy advisors, and beginning a process of communication, if need be, should be a basic part of preparing for the upcoming year’s annual meeting.

Calculating Pay

While both sides of the debate agree that standardized methods of calculating executive pay should be used, there is far from a consensus on what that method should be. A little over half of investors consider both granted and realized/realizable pay an appropriate way to measure and analyze executive pay. The leading group (25%) of investors that has a clear preference suggested that granted pay as a quantitative number, taking into account realized/realizable pay as a qualitative factor, would be most appropriate. Issuers on the other hand generally held the opposite view, with the vast majority supporting some form of realized/realizable pay as the optimal way of gauging pay for performance issues. This is an important issue to remember, particularly for issuers. While the final decision will be with the board on how to evaluate pay, when preparing for the annual shareholder meeting companies should be aware of how their pay stacks up to peers on an "as granted" basis as well. If those numbers offer an unflattering view of the company’s pay, issuers should be prepared to say (preferably in the proxy statement or an earlier filing) why the company used their own calculation and why it offers a more accurate picture of pay vs. performance than alternatives. As a final cautionary note, companies should always look to previous reports by leading proxy advisors for pay calculations. Just because pay has not been an issue in the past doesn't preclude problems down the line due to different calculation methods, even where a company does not perceive a significant change in pay from one year to the next.

Pay for Failure

Finally, of note regarding compensation issues that can or will affect the majority of US companies, there is significant agreement on the issue of “Pay for Failure.” In cases where a CEO (or other major executive) leaves the company, both investors and issuers are in agreement that "in a scenario where a CEO receives sizable termination package at a time of significantly lagging shareholder returns" cash severance exceeding 3 times base salary and target bonus and a new severance agreement entered immediately prior to departure would be inappropriate. Investors also generally feel that acceleration of unvested equity, a new severance agreement immediately prior to resignation, and large pension/SERP payouts would also be inappropriate. Issuers did not concur, generally, with those sentiments. However, as stated in the prior discussion of pay calculations, while a company does not necessarily have to adopt whatever investor view holds sway at the moment, it is always necessary to be aware of how the company’s shareholders will view the board’s decisions. In cases such as this, further explanation, at minimum, may be needed prior to this becoming an issue during the lead-up to the annual meeting.

Independent Chair

While compensation was the number one concern for investors and issuers alike, there were still a number of other major ongoing issues that issuers continue to face and that investors remain concerned with. One of the largest of these issues remains the question of whether a company should have an independent board chair, what steps a company should take when it receives a shareholders proposal, and what a company can expect its shareholders to do. While the answer to this will vary from company to company, the results of the survey are once again illustrative for our purposes. Of the investors polled

An even larger percentage said that the totality of factors like independent lead and board structure, but also including factors such as overall performance and a company’s reasons for not having an independent chair, were very relevant to their decision. This is a nuanced and very important answer for those companies that feel maintaining its current board structure confer advantages that separating the CEO and Chair would not. It means that investors and shareholders are not voting automatically on this issue (unlike other issues like majority vote, declassify board, etc.), but instead looking at each individual company. Make no mistake, issuers will have to justify their positions, and address the issues important to shareholders, but it appears that there is not yet a consensus among investors that boards need to have a separate CEO and Chair.

Political Spending

Given the year in which this discussion is taking place, expect the subject of political spending by public issuers to be given a disproportionate amount of attention in the coming year. While these proposals have yet to garner significant levels of support (no proposals related to political spending received majority support in 2012) there has been a spike in proposals since the Citizens United ruling by the Supreme Court in 2010, and with each year more issuers face one or more proposals regarding these issues (a more in depth discussion of this complex issue would blunt the focus of the current topic.)

However, it is doubtful that we have seen even the tip of the iceberg of proposals relating to political spending and lobbying expenditures and we would expect increasing attention to this subject in the lead-up to November 7, followed by the post-mortem that will inevitably occur as various groups attempt to track down the large influx of money into the political process. Given that this will continue to be an issue over the next year, companies should be aware of investor sentiment regarding the issue, given the general disagreement in opinion. Of particular interest, issuers should be aware that investors generally feel that greater disclosure of lobbying and political expenditures would be desirable, in contrast to issuer sentiment of the opposite. As with any situation where investor and issuer sentiment differs, this should inform a company’s response to these issues in a proactive way. One example, of many, of company’s addressing this issue successfully will be to enunciate a policy or guidelines on which all political expenditures will be made, pre-empting by-law amendments and other more prescriptive solutions proposed by shareholders. Each specific response, of course, will have to take into account the company’s individual shareholders and will vary from company to company and investor to investor.

Proxy Access

Last (for the purposes of this article using the framework or the Survey results) of the subjects relevant to U.S. issuers for 2013 annual meetings, is Proxy Access. This has been the subject of numerous articles by Eagle Rock and others, and for those interested in a more detailed description of the history and practice with regards to Proxy Access, readers should refer to the Eagle Rock website “Archive.” In many ways the results of the survey were similar to the discussion taking place about the separation of CEO and Chair. While not yet receiving the level of support among either investors or issuers as proposals mandating an independent board chair, investors were most likely to look at a totality of circumstances in determining their support for these proposals.

Among more specific factors considered by investors, minimum ownership thresholds were the most likely to be important, followed closely by minimum ownership duration requirements. Other factors considered in the “totality of circumstances” included company governance structure and history, proponent rationale, the company’s ownership profile, and whether the proposal is binding or non-binding. It should be noted, however, that these results are of limited utility. While they state what general subjects are most important to investors, issuers will have a hard time using these results for practical purposes, as there are no specific numbers attached for what numbers might be ideal for each threshold. For instance, both investors and issuers agree that ownership level threshold is the single most important factor, but it would be surprising if both sides felt the same specific threshold was important. Unfortunately this was too specific for purposes of the survey. It does, however, offer an important jumping off point for any discussions regarding these proposals as priorities for both parties will be similar.

Conclusion

While not a textbook of how to deal with each issue that will come up for the next annual meeting, issuers and investors alike should view the above framework as a primer for the more in depth discussions that will take place in the investor community over the next few months. By no means comprehensive, many of the less controversial or more in depth proposals may be found on the Eagle Rock website (eaglerockproxy.com) including an in-depth look at the results from the 2012 proxy season in power point format (as a webinar and slides) and a summary article highlighting more important developments and surprises from the previous season. As always, please contact Eagle Rock for more in-depth discussion and details that expressly apply to your own company or group. Have a pleasant fall season.

For the source ISS survey summary:
http://www.issgovernance.com/files/private/ISSPolicySurveyResults2012.pdf

CORPORATE GOVERNANCE: OBSERVATIONS & TRENDS FROM THE 2012 PROXY SEASON

2012 was a typically busy proxy season. There were numerous challenges,both new, old, and recurring for issuers and proponents alike to deal with in 2012. Of the new issues, none were more prominent or more discussed than private ordering of proxy access (see this article posted at eaglerockproxy.com for more detailed information regarding the development of proxy access.) As with many new issues, private ordering will continue to develop, as both issuers and proponents hone their strategies to deal with developing trends and legal issues. As will be discussed in more depth, the end result for this year was largely successful for issuers, with the majority of proposals legally excluded from proxy statements, and only a few successes by proponents at companies that had the issue actually go to vote. It was also the second year of issuers dealing with Say-on-Pay issues. Many of the trends from 2011 continued this year, with similar passage rates and approval percentages from shareholders. Surprisingly, and perhaps encouragingly, the majority of companies that had issues with failed or almost failed votes from 2011 improved their shareholder approval percentages significantly and, in large part, passed their 2012 SoP votes comfortably. 2012 also saw a continuation of long standing trends in corporate governance, with approval rates staying high among investors for long-standing "gold standard" issues such as majority vote requirements in uncontested board elections and declassification of board proposals.

By The Numbers

As stated, the trend continues with long established governance proposals. Not only were Majority Vote (with 39 as of early July) and Declassify Board proposals (with 83) the most commonly received and voted on proposals this year, they also received widespread support with investors. Declassification of Board proposals received an average support level of 89% of votes cast at all Russell 3000 companies that received proposals. We note that this is in line with previous trends and indicates a continued broadening of the trend, concurrent with the smaller, but more governance leading, S&P 500, which already has declassified boards at two-thirds of its member companies.

Likewise, Majority Vote proposals continue to garner significant support, with an average support level near 63% in 2012, up from 59% in 2011. While nowhere near the unequivocal support of declassification proposals (indeed, two management proposals to institute majority voting in director elections actually failed to receive shareholder support) the trend is clear and increasing. According to Institutional Shareholder Services (ISS) 79% of companies in the S&P 500 have majority voting in some form or fashion (including director resignation policies not officially adopted as Bylaws).

However, not all shareholder proposals regarding corporate governance have enjoyed the same level of support. While Chairman Independence proposals increased significantly in 2012 (50 such proposals were voted on this year in the Russell 3000, compared to 28 in 2011) only three passed in all of 2011 (10%) with 4 more (8%) receiving greater than 50% support in 2012. In comparison, the least successful of the major established governance proposals, proposals that have been fought over for years, were proposals to allow shareholders to call special meetings, with a 21% passage rate. Given the current levels of support, Chairman Independence proposals have a significant and difficult road ahead. As such, issuers will find that, in general and in the absence of other governance issues, there is still time to formulate positions and indeed to position themselves for what the future holds.

Say-on-Pay

While support levels remain high during the second year of Say on Pay voting, there are some indications that shareholders continue to evolve various policies for voting. There were 53 Say on Pay failures (so far) in 2012 compared to 44 failures in all of 2011. We note that, of the companies that failed last year, five of those companies failed two years in a row (Cooper Industries, Hercules Offshore, Kilroy Realty, Nabors Industries, Tutor Perini.) While certainly bad news for those companies, the implications for others that have experiences low levels of support for their SOP proposals is encouraging. While the companies that failed and/or received lower than average support levels from last year used numerous strategies to improve shareholder support (from increased engagement and more disclosure to changing overall pay structures to reflect pay for performance values) investors remained open to efforts by issuers to improve executive compensation programs. Companies that recovered from failed 2011 say on pay votes and had their 2012 say on pay proposals approved included HP, ShuffleMaster, Beazer Homes USA and Jacobs Engineering.

It was not all good news in 2012, as noted, which saw a significantly larger number of companies failing to receive majority support. There were also some higher profile companies that suffered shareholder displeasure in 2012, including Citigroup, Big Lots, Cooper Industries PLC, Mylan Inc., Pitney Bowes Inc., NRG Energy Inc., International Game Technology, KB Home and Nabors Industries.

As for proxy advisory services, we note that ISS recommendations with respect to say on pay proposals were approximately 86% "FOR" and 14% "AGAINST", which was essentially in line with results and recommendations from last year. While ISS recommended "AGAINST" companies only 14% of the time, ISS recommended "AGAINST" each of the 49 companies to fail their SOP vote. So while a company's chance of failing a SOP vote in the absence of a recommendation from ISS is only 3%, a negative recommendation from ISS correlates with a 20% failure rate.

Proxy Access

Essentially, Proxy Access is intended to allow qualifying shareholders to require the company to add to the ballot a certain number of directors without engaging in a proxy fight. The SEC originally attempted to set these qualifications at 3% of outstanding shares for 3 years. After the courts struck this rule down, the SEC left proxy access to be determined by each individual company, in a process known as private ordering. For more on this issue, please see our prior article regarding proxy access and private ordering. In 2012, 22 proxy access proposals submitted; only 7 have made it to vote YTD. Of these, 2 passed (Chesapeake Energy and Nabors Industries) and 5 failed. Of the two companies which passed proxy access proposals, both have numerous corporate governance issues; both proxy access proposals were non-binding and based on the SEC's now-vacated Rule 14a-11 (the "3 for 3") and it should be noted that other shareholder proposals at those companies also received high support.

Of those that did not go to vote, a proposal at Hewlett Packard was withdrawn by a labor fund after the company agreed to sponsor a proxy access bylaw proposal in 2013. HP's proxy access bylaw would be based on the SEC's Rule 14a-11 (3% shareholder ownership held for 3 years and shareholders would be limited to 20% of the board seats). At Pioneer Natural Resources, Norges Bank withdrew its proxy access proposal after the board adopted a majority voting standard in the election of directors and sponsored a proposal to declassify the board.

However, the majority of Proxy Access proposals were omitted due to no-action letters from the SEC, most often relating to the most common form of proxy access proposal, a non-binding 1% or 100-holder rule promulgated by the United States Proxy Exchange. While this is a significant portion of the proposals, it is unlikely to be repeated in future years. This is more likely indicative of a proposal that is in the early stages of formulation of the wording of the proposal than it is of an overall attitude at the SEC regarding these proposals.

Political Spending

There are three main proposals regarding political spending by companies that issuers have faced in 2012. These three proposlas comprise the vast majority of all proposals relating to political spending. The first, and most prevalent of these (with more than 50 proposals), was endorsed by the CPA (Center for Political Accountability) and involve Political Disclosure and Oversight. These would essentially require companies to increase disclosure of political spending as well as policy considerations regarding how future political contributions will be made. The second most prevalent of these types of proposals are proposals regarding increased Disclosure of Lobbying Payments. These are generally endorsed and proposed by state employee representatives, unions, and religious investment groups. Third, with approximately 9 proposals expected in total, was Say on Political Spending, endorsed by NorthStar. The proposal would essentially be an up or down vote on Political Contributions, similar to Say-on-Pay proposals.

While political spending proposals have been around for a number of years, there has been a significant increase in the amount of proposals submitted over the past few years. The spike, shown above, that started in 2010 has continued and accelerated. It should be noted that, while certainly not the only factor, Citizens United (the Supreme Court decision that allowed virtually unlimited campaign contributions by companies and unions, or as the presumptive Republican Nominee for President once said "Corporations are people, my friend") was decided in 2010. Pre-Citizens United, the yearly average number of proposals voted on for the period 2005 - 2009 was 26.4 proposals. In 2012, so far, there have been almost triple the average pre-Citizens United landscape. It should be noted that no political spending proposals have passed this year, but 19 received 30% or higher support levels (for/against).We also note that political spending proposals have become the most prevalent shareholder proposal, pre-vote, with 115 total proposals as of May 15, 2012. This reflects the a far greater concern, on the part of at least some investors, that the political activities of companies be up front, well thought out, and transparent. It will be interesting to see what developments there are in the area, both as election season comes to a close and going into the next proxy season.