Risk factor disclosure increased to 60% in 2024 from 16% in 2023 and 12% in 2022, and was most prevalent among Communication Services and Information Technology companies (89% and 78%, respectively). Prevalence of risk factor disclosure was generally correlated with company size (75% mega-cap; 60% large-cap; and 42% mid-cap).
AI-related Business section and MD&A disclosure in the Form 10-K rose to 40% in 2024 from 30% in 2023 and 28% in 2022, and was most prevalent by a wide margin among Information Technology companies (85%). About half of mid-cap and mega-cap companies made this disclosure compared to 39% of large-caps.
Proxy statement disclosure about board or board committee AI-related oversight rose to 9% in 2024 from about 1% in each of the prior two reporting periods, and was most prevalent among Information Technology, Health Care, and Financials companies (each at 14%), with the prevalence of disclosure generally positively correlated with company size. Among those that made such disclosure, oversight was most commonly allocated to the full board, followed by the Audit Committee.
As noted here, investor expectations regarding AI-related disclosure and company practices are evolving.
The following table outlines the factors ISS and Glass Lewis currently consider in their vote recommendations on AI-related shareholder proposals:
Proxy Analytics has tracked 13 submitted and 8 voted AI-related shareholder proposals for the 2024 proxy season (July 1, 2023 – June 30, 2024).