Not only were there fewer recommended director vote withholdings, Institutional Shareholder Services (ISS) said the 2004 season saw a 5%+ drop in shareholder proposals making it to the ballot and a 66% reduction in proxy fights compared to the more contentious 2003 season.
“Unfortunately, the season opening drama that unfolded around Michael Eisner and the Disney board, overshadowed the positive corporate governance changes that were taking place at other companies,” said Patrick McGurn, senior vice president and special counsel at ISS. “People love to focus on the disputes like those at 3M, Gillette and MBNA, but the real story is the quiet changes that boards have made.”
The less combative atmosphere also extended to the ratification of a company’s outside audit firm, ISS said. The advisory service said it recommended against approving the outside audit firm in 4% of companies it reviewed in 2004 – down from 7% in 2003. In 2004, those getting an “against” recommendation included fewer than 75 companies, with only three on the S&P 500.
Likewise, the percentage of companies where ISS urged clients to oppose stock-option plans dropped to 25% in 2004 from 32% in 2003 and 40% in 2002, the news release said.