Kezia Farnham Image
Kezia Farnham
Senior Manager

Proxy season explained: What it is & how to prepare

October 11, 2023
0 min read
Board member preparing for proxy season

Flowers have spring, trees have fall, and corporations have proxy season: the few months out of every year, shareholders join the board of directors in making critical business decisions. Though proxy season may only last about three months, preparations begin long before the first annual meeting.

While the board and company leadership have to prepare everything from proxy statements to proxy cards to materials for the annual meeting itself, shareholders must also take time to craft an informed decision on new proposals. But even those processes look different than they used to. Thanks to the new universal proxy card, boards and shareholders alike wonder how proxy season will change and what that means for their decision-making. To help, this article will explain:

  • What proxy season is, and when it happens
  • What shareholders and board members need to know about proxy season
  • Key trends from proxy seasons over the years
  • A proxy season checklist to help boards prepare

What is proxy season?

Proxy season definition: The three-month period when most corporations host their annual shareholder meetings.

Proxy season is a period in the spring during which large, publicly traded companies host their annual shareholder meeting as required by the Securities and Exchange Commission (SEC). Each company holds only one meeting, but it’s called a “season” because most of these meetings happen around the same time; this allows corporations to take Q1 to audit and prepare financial documentation from the previous fiscal year.

Some corporations hold their meeting in the second half of the year and participate in what’s called a mini-proxy season.

When is proxy season?

Proxy season begins in early spring when corporations send their shareholders the official proxy statement. Proxy season ends after the shareholder vote at the annual meeting. The exact timing can vary between companies but typically lasts from April to June.

When to prepare for proxy season

The SEC requires not only that corporations hold a shareholder meeting but also that they send out proxy statements before the meeting. That means that corporations must prepare long before proxy season begins.

Many boards will enter a calendar year with proxy season on their agenda. They’ll then work with company leadership to ensure they've gathered the necessary information by the time proxy season begins. This ranges from complete financial reports to the board’s position on critical issues like board succession, strategic planning and the recommended audit approach for the year ahead.

Proxy season for investors

Investors — also called shareholders — have a unique responsibility before and during proxy season. Though corporations must present the information, investors must use that information to cast their vote. To do that, they should prepare for:

  • Proxy statements: The proxy statement is created and distributed by the corporation and includes everything a shareholder would need to make an informed decision. Proxy statements are typically sent online and recorded in the SEC database.
  • Proxy voting: Many shareholders don’t attend the annual meeting. Instead, proxy voting enables them to submit a ballot so their vote can still be counted.
  • Proxy fight: Shareholders sometimes disagree with the board on the company’s strategic direction. This can lead to a proxy fight, during which the dissenting shareholder will try to gain votes for their own position.
  • Universal proxy rules: In the event of a proxy fight, the SEC’s new universal proxy rules require a universal proxy card so shareholders can see the board’s proposal and the shareholder’s proposal side by side.

Proxy season for boards

For boards, proxy season is as much about preparing proxy statements and proxy cards as it is about understanding and anticipating shareholder sentiment regarding key issues. To do that, boards should consider:

  • Shareholder activism: In recent years, activist shareholders have taken bolder actions to sway company decisions. Boards should prepare to engage those shareholders and address their concerns ahead of the shareholder vote.
  • Investor returns: Shareholders want to see a return on their investment, with more shareholders making return-on-cash demands. Boards must enter proxy season ready to speak to financials, whether they’re stellar or underwhelming.
  • ESG: Environmental, social or governance (ESG) has been omnipresent in the boardroom in recent years, largely because shareholders have pushed for it. While not all ESG-related shareholder proposals pass, they’re still an investor priority that boards need to address.
  • Director performance: Shareholders increasingly scrutinize boards, especially their approach to ESG, director compensation and company performance. Boards should expect shareholder skepticism about board candidates and have clear and compelling reasons for the appointments.

Proxy season trends

The most compelling social issues of the time significantly influence the atmosphere surrounding proxy season. During proxy season 2023, for example, ESG and company financials were the talk of the boardroom. Here are some other issues on the agenda for previous proxy seasons:

YearTrend 1Trend 2Trend 3
Proxy season 2023Focus on investor returnsContinued emphasis on ESGRenewed scrutiny of board directors
Proxy season 2022Increasing number of shareholder proposalsRise of both pro- and anti-ESG stancesDiversity remains a focus
Proxy season 2021Investors openly voting against directorsESG continued to hold shareholder attentionBoard diversity became a greater priority
Proxy season 2020Emphasis on financial stability and performance through COVID-19Resurgence of ESG issues, particularly those related to employee health and human capitalGreater emphasis on the strength of the supply chain
Proxy season 2019Shareholders interested in director issues, like compensationCorporate sustainability becomes a shareholder priorityGender diversity on boards ramps up

Proxy season checklist

For most boards, proxy season is a balancing act. It requires boards to understand and manage shareholder priorities and expectations while still moving through key items on the agenda. Although most annual meetings follow a scripted format, a lot of preparation goes into that script — and the documents that a successful proxy season depends on.

Boards should:

  • Prepare compensation disclosure: The Dodd-Frank pay versus performance rule requires companies to disclose more executive compensation information than ever. Because this is mandatory in the proxy statements, boards should educate leadership about the disclosure rules, analyze compensation from recent fiscal years and benchmark performance to ensure it aligns with the pay guidelines.
  • Understand shareholder sentiment: The universal proxy rules will create a proxy season that empowers shareholders. While it can create more opportunities for shareholder activism, it also invites corporations to align with shareholders ahead of time. Engage proactively, identify and correct concerns, clearly communicate board effectiveness and make a plan to respond to activism.
  • Tie ESG to company strategy: ESG remains a focus for many shareholders. Taking action can quell their concerns, particularly if boards can show how ESG is an integral part of the company strategy. This can include detailed reporting on corporate governance procedures, board and executive compensation, climate-related disclosures and more.
  • Prepare board proposals: Proxy season allows shareholders to vote on proposals. But it’s up to the board to determine what those proposals should be. Appointing or replacing board directors is common, but shareholders may vote on anything from product pricing to workforce initiatives.
  • Review shareholder proposals: Shareholders can also prepare their own proposals. For example, in 2023, Starbucks shareholders pushed for a review of the chain’s plant-based milk upcharge. The board must review those proposals and include their recommended vote in the proxy statement.
  • Schedule the annual meeting: Corporations must notify shareholders when and where the meeting will occur and offer other options for joining.
  • File a proxy statement: Proxy season begins once the corporation files and disseminates the proxy statement.
  • Send the proxy card: Following the proxy statement, boards should provide a proxy card so shareholders can vote on all proposals. Shareholders should receive the card at least 60 days before the anniversary of the last annual meeting.
  • Collect votes: Most companies require that shareholders who will not attend the meeting submit their votes at least 24 hours before the annual meeting.
  • Hold the meeting: Most annual meetings are largely administrative, and few shareholders attend them in person. Still, the board should prepare to run through any proposals and hold a vote on each.
  • Announce the results: This is the final step in proxy season. Many corporations will share the results as the proposals are read out during the meetings, while others will provide shareholders with a hard copy of the results for each.

Pave the way for proxy season by getting to know your shareholders

Before people become investors, they’re consumers, many of whom strive to balance improving their returns with meaningfully responding to social and environmental challenges. Following COVID-19, for example, investors became understandably invested in ESG issues related to employee health and wellbeing. But this focus on ethical investment has also turned shareholders into activists aiming to drive change by using the proxy season to shake up the boardroom.

As a result, preparing for proxy season means preparing for whatever shareholders may bring. Start by learning more about how shareholder activism has changed in recent years and how the right proxy insights can make all the difference.


Your Data Matters

At our core, transparency is key. We prioritize your privacy by providing clear information about your rights and facilitating their exercise. You're in control, with the option to manage your preferences and the extent of information shared with us and our partners.

© 2024 Diligent Corporation. All rights reserved.