The 2008 U.S. proxy season could be one of the most contentious in recent memory following the Securities and Exchange Commission’s decision to exclude proxy access proposals, and as shareholders continue to seek curbs on executive pay. Thus far, labor and public pension funds have filed two proposals calling for access—at New York-based JP Morgan Chase and Bear Stearns—in a bid to test the agency’s decision in court. Meanwhile, dozens of “say on pay” proposals—calling for an advisory vote on compensation—have been filed, once again placing the issue front-and-center during the annual meeting season.

Some shareholders also intend to challenge companies over their exposure to the subprime mortgage crisis now roiling capital markets. Homebuilders are being targeted with a broad range of proposals that include requests to set up a “mortgage lending compliance committee,” while labor fund officials say directors at many financial companies will become targets for “vote no” campaigns.

Concerns over compensation will not be limited to calls for advisory votes on pay in 2008, moreover. Novel proposals will include demands for companies to adopt a policy on the use of so-called 10b5-1 stock-selling plans, and those to limit or bar tax gross-ups for senior executives. Another resolution seeks to place limits on executive employment agreements.

“The 2008 season will be much as it was last year,” says Charles Elson, director of the University of Delaware’s Weinberg Center for Corporate Governance, alluding to investors’ continued emphasis on matters of pay. “Compensation will again be a main focus.”

Board leadership concerns also will feature prominently in 2008. Resolutions to split the chairman and CEO role or to install an independent board chairman are now pending at roughly 20 companies, while a novel proposal is calling on six to 12 companies, including Merrill Lynch, Bank of America, and Verizon, to detail and disclose succession planning policies. Such calls are not surprising in light of the record CEO turnover in recent years that may continue into 2008 as more and more chief executives step down amid heavy losses stemming from the subprime mortgage crisis.

Investors also will press forward with old, new, and updated proposals that seek to improve board accountability. As in past years, scores of majority threshold voting proposals have been filed at companies for the 2008 season. The United Brotherhood of Carpenters and Joiners of America plans to file up to 100 such resolutions, with roughly 80 percent targeting S&P 500 companies. And, notably, a new proposal, filed by the Change to Win Investment Group (CtW) and affiliated funds, will call for the exclusion of uninstructed broker votes in director elections.

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