Investor support for proposals from both management and activist shareholders is at a five-year low, a new report finds.

This is due in part to a decline in market valuations – support for directors and say-on-pay (executive remuneration) proposals generally tracks stock price movements, according to Broadridge Financial Solutions’ 2023 ProxyPulse report, which looks into shareholder voting trends in US publicly listed companies over the past five proxy seasons.

There is also a general decrease in support for environmental, social and governance (ESG) proposals because many companies have taken steps to be more proactive and transparent, Broadridge says.

At the same time, the number of individual shareholders entering the market has increased. As a group, they held 31.5% of the shares this year, up from 29.6% five years ago, and more of them are voting, says Chuck Callan, Broadridge senior vice-president for regulatory affairs, who co-authored the report.

Individual investors cast only 16% of their votes in favour of environmental and social proposals while institutions cast 25.5% in favour. In fact, support for ESG proposals in general decreased to 25.5%, from 30% in the prior season – the lowest in five years.

A total of 654 directors failed to secure majority support, the greatest number in five years. And while there were more shareholder proposals (588) than at any time over the past five years, shareholder support fell to 24.6% on average, a drop of 10 percentage points from the last season.

Meanwhile, support for say-on-pay proposals at 86.3% on average was the lowest in five years.

Companies and shareholders continue to realize the benefits of online meetings and technology continues to advance the trend. The number of virtual-only meetings was close to the all-time high at the height of the pandemic, and few companies are returning to in-person-only meeting format.

In the first six months of 2023, there were 1,815 virtual-only meetings, close to the all-time high during the pandemic (1,832 in 2022 and 1,891 in 2021).

The report is based in part on an analysis of company Form 8-K filings and Broadridge’s processing of shares held in street name, accounting for over 80% of all shares outstanding of US publicly-listed companies.