16. PEACE, JUSTICE AND STRONG INSTITUTIONS

Volatile Market Sets the Stage for an Atypical Proxy Season – Barron’s

Impact team
Written by Impact team

Volatile Market Sets the Stage for an Atypical Proxy Season  Barron’s

Illustration by Elias Stein

This proxy season, annual meetings have gone virtual, companies have discovered their kinder selves amid a pandemic, and once-quiescent investors are more vocal about corporate accountability. That’s a combination increasing the likelihood of more support for some shareholder proposals, notes Manhattan Institute senior fellow James Copland.

Proxy season is a springtime phenomenon, when most companies hold annual general meetings and investors cast votes for directors and proposals. Through April 30, 76 of Fortune 250 companies have met, says Manhattan Institute’s Proxy Monitor. Of this group, 40 faced 79 shareholder proposals. “As a general rule, shareholders tend to be less likely to support company management in shareholder-proposal voting during bear markets,” Copland says. Covid-19 may also be affecting shareholder sentiment, he adds.

Shareholder proposals were mostly filed before February. As the market lurched, many companies adopted measures that earlier would have been deemed shareholder-unfriendly, including suspending buybacks and dividends and boosting worker pay. As proxy adviser ISS writes, boards “may open themselves…to intense criticism and reputational damage” by buying back shares, especially if they have cut jobs.

Here are a few coming highlights. May 19: JPMorgan Chase has said it will appoint a new lead independent director after shareholder complaints. May 21: McDonald’s shareholders have criticized the chain for poor Covid-19 workplace protections. May 27: Amazon.com confronts 12 shareholder resolutions, including one for an independent board chair. June 3: Alphabet faces proposals to appoint a human-rights expert to its board.

Next Week
Monday 5/11

Cardinal Health, Marriott International, Mylan, Simon Property Group , and Under Armour report quarterly results.

Tuesday 5/12

Duke Energy , Honda Motor , Ingersoll Rand, Toyota Motor , and Vodafone Group report earnings.

3M, Charles Schwab, and ConocoPhillips hold their annual meetings of shareholders.

The National Federation of Independent Business releases its Small Business Optimism Index for May. Economists forecast a 86.5 reading, down from March’s 96.4 figure. The 8.1 point drop in March was the steepest monthly decline in the survey’s history and ended a streak of 39 months above a 100 reading for the index.

The Bureau of Labor Statistics releases the consumer price index for April. Consensus estimates are for a 0.4% year-over-year uptick, after a 1.5% gain in March. The core CPI, which excludes volatile energy and food prices, is expected to rise 1.7% compared with a 2.1% jump in March.

Wednesday 5/13

Cisco Systems and Sony report quarterly results.

The BLS releases the producer price index for April. Expectations are for a year-over-year fall of 0.2% while the core PPI is seen gaining 0.8%. This compares with rises of 0.7% and 1.5% in March, respectively.

Thursday 5/14

Applied Materials and Brookfield Asset Management report earnings.

Altria Group, Ford Motor, Intel , and United Parcel Service hold their annual shareholder meetings.

The Department of Labor reports initial jobless claims for the week ending on May 9. Jobless claims peaked at 6.9 million for the week ending on March 28, but continue to surpass levels unheard of until this year.

Friday 5/15

The Census Bureau reports retail sales data for April. Economists forecast sales plummeting by 10.6%, surpassing March’s 8.4% monthly decline as the steepest on record.

DraftKings, JD.com, and VF Corp. hold conference calls to discuss quarterly results.

The Federal Reserve Bank of New York releases its Empire State Manufacturing Survey for May. Economists forecast a minus 70 reading, better than April’s minus 78.2 figure. April’s reading was the lowest level in the survey’s history by a wide margin.

The University of Michigan releases its Consumer Sentiment Index for May. Consensus estimates are for a 68 reading, below April’s 71.8. The index was last below 70 in 2011.

The BLS releases its Job Openings and Labor Turnover Survey for March. Expectations are for 5.9 million job openings on the last business day of March, down from 6.9 million in February.

Write to Leslie P. Norton at leslie.norton@barrons.com

Source: barrons.com

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