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Knowledge is King

D.F. King has more than 75 years of experience providing strategic advice in governance, compensation, M&A and proxy contests. In August, the company released its annual The Debriefing, 2021 Proxy Season Review and Fall Engagement Guide, providing a detailed overview of 2021 trends and key insights to help companies manage their 2022 proxy season and prepare for their annual meetings.

The guide was created by Zally Ahmadi, Senior Vice President, Corporate Governance, ESG & Executive Compensation at D.F. King. Her guide covers top shareholder proposals, including environmental, social and governance (ESG) initiatives, board diversity, pandemic-related executive compensation changes, virtual meetings, and trends in shareholder engagement and investor behaviour, among other valuable takeaways.

Ethical Boardroom sat down with Zally Ahmadi to discuss consulting and proxy solicitation services and how D.F. King keeps boards apprised of the latest trends and tripwires.

ETHICAL BOARDROOM: D.F. King conducts hundreds of successful proxy solicitation campaigns every year for corporations across a wide range of industries – how do you stay ahead of the pack in what must be a very competitive market?

ZALLY AHMADI (ZA): AST’s D.F. King team consists of seasoned account executives and institutional vote identification service and research teams who all contribute to our success. We work with an expansive range of companies, and it is truly a team effort – our rich experience and depth of knowledge play a critical role in the success of each campaign. D.F. King has a broad spectrum of on-the-ground data collection expertise in matters such as corporate governance, shareholder activism and M&A. We emphasise strong analytical capabilities to guide our recommendations in the solicitation approach, engagement strategy and communications programme, tailored to our clients.

Our analyses cover institutional research and voting patterns in unique circumstances, disclosure review, shareholder profile formulation and trading analysis to determine projected outcomes. Lastly, a key factor of our success is the year-round relationship we maintain with our clients. The work we do outside of the solicitation period significantly contributes to the success of an annual meeting.


EB: Shareholder focus on ESG issues has grown exponentially since the start of the pandemic, taking centre-stage during this year’s proxy season. Tell us how D.F King helps companies identify which ESG issues and risks are the most important to investors?

ZA: Currently, identifying ESG risk is incredibly important to our clients. Our analysis is rooted in our extensive annual meeting advisory services and investor engagement strategy experience. It helps us identify the level of risk for our clients. We help hundreds of clients every year with their annual meetings – companies of varying sizes and a broad spectrum of industries. Our advisory services are year-round, starting with the solicitation period, through the annual meeting, across the shareholder engagement period and ending where we started with the solicitation period. This review cycle provides solid insights into evolving trends and priorities that investors have today.


Our direct involvement in engagement strategy and institutional research helps us ascertain information on the new and emerging focus areas of key institutional investors and upcoming changes to voting guidelines. We combine this working knowledge with our integrated data platforms, trading and shareholder profile analysis and targeted investor data. Our ownership intelligence services help to ensure there are no surprises for our clients as they enter proxy season.

EB: What shareholder proposals have stood out so far in 2021 and why?

ZA: The 2021 proxy season had several exciting trends for the books! The number of submissions for social proposals was record-breaking; these proposals surpassed traditional governance-related proposals for the first time. Notable topics within this category included requests on transparency for political contributions and lobbying, requests for reporting on EEO-1 data, and requests regarding board and management diversity. These types of proposals received increased levels of submissions and support levels, with the latter two receiving average support levels in the 50th and 60th percentile, respectively. EEO-1 proposals are worth discussing due to the sheer number of these proposal submissions alone. This proxy season, we saw more than 70 submissions, outnumbering all other social proposals.

Environmental proposals made waves as well. Nearly half of all environmental proposals that made it onto ballots this year received majority shareholder support, compared to none just two years ago. Notable topics were requests for climate change reporting, which received the highest number of submissions within this category, followed by requests regarding GHG emissions. This year, a ‘say-on-climate’ initiative emerged, where these proposals requested an annual advisory vote on a company’s climate-related plans; one such proposal received majority shareholder support.

EB: The US Securities and Exchanges Commission (SEC) amended certain financial disclosure requirements in Regulation S-K in 2020 for the first time in decades. Were you surprised how 2021 became an inflection point for human capital management (HCM) disclosures, compared to previous years?

ZA: This issue has been on the rise for a few years and, with shareholder engagement at the highest levels they’ve ever been, it makes sense that HCM disclosures are taking centre-stage. HCM has emerged as a top institutional investor priority. Two years ago, BlackRock identified HCM as one of its engagement priorities. Prior to the adoption of the SEC amendments, the Human Capital Management Coalition (a group comprised of 25 institutional investors) asked the SEC in a petition for rulemaking to adopt rules requiring issuers to disclose information about their human capital. It’s also an integral part of ESG disclosure frameworks, including SASB (Sustainability Accounting Standards Board).

EB: What are some of the concerns issuers have voiced in keeping up with the rapid rise in ESG interest by their investors?

ZA: We often hear from issuers who are beginning the ESG-reporting process. They don’t know where to start or what to focus on when it comes to these types of disclosures. Our clients are struggling to get face time with their investors to discuss these concerns and are bombarded with various ratings agencies, publishing conflicting information regarding their ESG profile. For those who are in this situation, it’s important to remember that the best place to start is to outline the ESG-related issues that are materially relevant to your company and industry. Then review the initiatives your company has undertaken to address these concerns. Taking the time to understand your shareholder base and, ultimately, building the right advisory team can get the process started.


EB: Can you outline a few of the top ESG-related priorities that are front of mind for many of the largest investors in 2021?

ZA: Several leading institutional investors have published their expectations for engagement and disclosure heading into the 2021 proxy season. These are their key themes:

BlackRock wants to know how companies are addressing the significant social and economic dislocation caused by Covid-19 and the material business risks related to climate change, social and racial equity and demographic and technological shifts. Companies should explain the difficult choices they have made, how they balanced the interests of their various stakeholders, and how they plan to adapt their strategies and business practices to enhance their resilience.

Vanguard seeks to understand how boards identify, oversee and disclose material risks, such as those related to board diversity and climate change. Where climate change is a material risk, Vanguard supports targets and disclosure aligned with the Paris Agreement and the Task Force on Climate-related Financial Disclosures (TCFD) framework.

State Street wants companies to disclose more about board and workforce diversity. Disclosures should be provided on the role of diversity in HCM and the company’s long-term strategy and diversity goals. Companies should also disclose how they contribute to strategy, how they are managed and progressing when it comes to:

  • Measures of workforce and board diversity
  • Goals and strategy related to board-level racial and ethnic representation
  • How it reflects the diversity of key stakeholders
  • Board oversight of diversity and inclusion

EB: How are proxy advisory firms playing a role in holding companies accountable with regard to ESG? 

ZA: Proxy advisory firms are also influencing the ESG landscape by implementing an increasing number of voting policies for the election of directors that relate to environmental and social concerns. The two most influential proxy advisory firms in the US, ISS and Glass Lewis, both established policies on board gender diversity requirements. Starting this year, these firms have begun to highlight the lack of racial and ethnic diversity on boards. In addition, both advisory firms in their most-recent policy updates addressed increased attention to environmental and risk oversight and have expressed intentions to recommend against certain board members for any perceived failures in this regard.

EB: Moving forward, what do you think will happen if companies don’t engage with their shareholders on ESG-related factors? And, how important is it to get your investor outreach strategy right? 

ZA: In the US, there is a lack of regulation around ESG-related disclosures in comparison to many of our international counterparts. The push for increased reporting has been largely driven by investors. Companies that continue to shy away from engaging with their top holders, risk falling outside the realm of rapidly evolving investor-voting policies regarding ESG. Ultimately, this raises the risk for shareholder proposals targeting board members when they are up for election.

It is key to get your outreach strategy right, know who your top investors are, who the key decision-makers are, how they have historically voted on key issues and whether they are open to outreach saves time and effort in the long run. Keeping track of outreach efforts helps simplify a potentially arduous process.

Preparing participants beforehand is key, ensuring the right people are presenting and they are equipped with shareholder profiles, detailing investor priorities to potentially address topics that may arise. Being prepared and engaging the right advisors can lead to a smooth and productive engagement season.


Ethical Boardroom is a premier website dedicated to providing the latest news, insights, and analyses on corporate governance, sustainability, and boardroom practices.

Ethical Boardroom is a premier website dedicated to providing the latest news, insights, and analyses on corporate governance, sustainability, and boardroom practices.


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