Blog  •  April 14, 2021

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2021 Proxy Season Trends

Diversity, pandemic pay and climate risk: Trends to watch this proxy season

This is the time of year when we in New York wonder if spring ever will arrive. But arrive it will, and fast on its heels will come corporate proxy season.

This year’s proxy statements are likely to reflect both the extraordinary events of 2020 and the continuation of trends that have been gathering momentum in recent years. Boards face an enormous challenge to address these issues effectively, and the quality of their communication will play a central role in winning support from shareholders and the public. Here’s what we are watching.

COVID-19 disclosures. Companies have been addressing the impact of the pandemic in their quarterly earnings announcements, and investors have been watching them closely. Indeed, several companies have faced shareholder lawsuits for alleged failures to adequately disclose Covid-19 risks. Proxy statements are likely to discuss both the pandemic’s short-term effects on the company’s business, as well as its implications for long-term strategy.

Executive pay. The pandemic hit corporate bottom lines unevenly. Airlines and cruise operators for example saw business plummet, while food delivery and work-from-home equipment sellers prospered. CEO pay will reflect this dynamic, but boards might be cautious about making outsized pay awards in such unusual economic circumstances, particularly when unemployment remains high.

Investors also will be watching to see if boards adjusted the performance targets in executive compensation programs during the pandemic. Proxy advisor ISS released guidelines last year that cautioned against easing performance targets during the pandemic.

Although say-on-pay resolutions routinely pass with shareholder votes of 90 percent or more, boards will still need to address the goals and features of their pay programs in clear, understandable terms. At the same time, CalPERS and other large public-pension funds will continue to take a tough line on executive pay, scrutinizing the alignment between pay and performance.
Diversity. Compensation policy discussions this year are likely to include a focus on diversity, as more companies try to demonstrate concrete steps to address social justice issues. Last year, an analysis of the 500 largest US companies by Equilar found that slightly more than 20 percent tied executive pay to diversity goals. That share should rise in 2021.

Diversity also will be part of the discussion on board composition this season. Equilar found that 78 percent of the top 100 US companies included board composition disclosures related to gender in 2020, and 65 percent did so in relation to ethnicity or race.

Climate risk. Companies have started to say more about their climate risks since the release of the landmark report of the Task Force on Climate-related Financial Disclosures in 2017. But they’ve said little about what matters most to investors, such as the financial impact of climate risks, as we noted in our 2019 report on the state of corporate climate disclosure in the US.

Investors continue to demand more information from companies on their climate risks, and the US Securities and Exchange Commission announced its staff would "enhance its focus" on disclosures of climate-related risks in public company filings. As a result, corporate boards will face heightened expectations to address this issue. And if that wasn’t already enough, the arrival of activist funds on the scene will add even more pressure. We expect company proxy statements this year to include more discussion of climate risk and its implications for strategy, long-term planning and executive compensation.

Proxy modernization. In the past, proxy statements weren’t exactly page-turning bestsellers. Yet they contain vital information and are read closely by investors. Today, many companies regard the proxy statement as a strategic communication document, and use it to articulate important business messages as well as governance practices.

With clear language, a deliberate narrative structure, and the thoughtful use of engaging graphics, proxy statements are becoming a more effective tool in investor communications.

About Gargiulo + Partners
Gargiulo + Partners is a strategic communications firm that helps clients shape and deliver clear messages to shareholders, financial analysts and other stakeholders. The firm advises clients on the contents of their proxy materials and other financial reports. For more information, visit

About Donnelley Financial Solutions (DFIN)
DFIN is a leading global risk and compliance solutions company. We provide domain expertise, enterprise software and data analytics for every stage of our clients’ business and investment lifecycles. Markets fluctuate, regulations evolve, technology advances, and through it all, DFIN delivers confidence with the right solutions in moments that matter. Learn about DFIN’s end-to- end risk and compliance solutions online at or you can also follow us on Twitter @DFINSolutions or on LinkedIn.