My colleague Laura A. McIntosh and I have written an article entitled “Shareholders Focused on Stability in Proxy Votes,” in which we discuss the outcomes and lessons from the recently completed proxy season. Although the season was expected by some to generate increased activism, it now appears to have been the season in which shareholders began to put governance reform proposals back into perspective. As the credit crisis worsened and market turbulence became increasingly worrisome, shareholders appeared less concerned with governance issues and instead focused on corporate stability: directors generally were reelected with 90-plus percent support, backing for governance proposals fell from 2007 levels in many cases, and the number of governance proposals brought to a vote by shareholders decreased as some prominent activist investors dropped planned campaigns. The 2008 proxy season also brought a high number of proxy contests, although most of these contests involved campaigns to elect “short slates” of directors as opposed to proxy contests for control. The memo discusses the importance of effective communication between among companies and their shareholders as well as the value of takeover defenses in a down market.

The memo is available here.