Proxy Voting Fact Sheet (May 2014)

Despite reports of some notable activism cases (from Allergan to Sotheby’s), there was a significant decline in the first four months of 2014 in the volume of shareholder proposals (minus 15 percent or higher, depending on the index). This finding is attributable to systematic efforts made by management to improve communication with investors after the say-on-pay reform. Hedge funds that specialize in waging proxy contests and hostile exempt solicitations may be increasingly popular, but most companies have learned that engagement is critical to a long-term strategy to build support from the institutional investment community and insulate organizations from speculative activism.