Want a Bigger Say on Corporate Behavior? Move Your Money

Want a Bigger Say on Corporate Behavior? Move Your Money


Fidelity’s index funds were far more likely to vote against management. So were State Street’s. Self-styled socially responsible fund groups like Parnassus, and Boston Trust and Walden, were at the top of the rankings, followed by fund complexes with strong European roots, like Allianz, Pimco, DWS and Invesco.

Ms. Cook tallied all of the governance issues that went for a vote in publicly traded companies last year, including these:

  • Shareholder access to proxy voting.

  • Separating the role of chairman and C.E.O.

  • Aligning executive pay with company performance.

She also analyzed mutual fund company votes on social and environmental issues like board diversity, climate change, environmental stewardship, human rights and product safety, and found the same pattern.

For example, when management opposed corporate governance resolutions brought by shareholders, Morningstar said, here’s how often the big index fund companies supported shareholders:

  • BlackRock, 19 percent of the time.

  • Vanguard, 24 percent for Vanguard.

  • State Street, 31 percent.

  • Fidelity’s index funds, 53 percent.

And on social and environmental issues, here’s how often they supported shareholders:

  • BlackRock and Vanguard, 7 percent.

  • State Street, 27 percent.

  • Fidelity’s index funds, 53 percent.

In their defense, the American fund companies say that we shouldn’t look only at these voting patterns. “Proxy voting is only one tool in our toolbox,” said Glenn Booraem, who heads investment stewardship for Vanguard. “Engagements” — discussions — with individual companies are important too, they say, and that is undoubtedly true.

BlackRock, for example, said in a written statement, “We have the largest investment stewardship team in the industry and engage with companies even in the absence of shareholder proposals.”

The company said it voted against corporate directors when “we do not see progress through engagement” and added: “We support shareholder proposals that we believe will enhance the value of our clients’ investments, but blindly voting for shareholder proposals is not a responsible approach to stewardship.”

While most proxy votes are merely advisory, those on corporate board membership and on the terms of a merger or acquisition are binding, and as major shareholders, the fund companies have clout. But their voting records suggest that they are not all using it aggressively.

In short, while votes are concrete, the effects of fund company discussions with corporate managements are as hazy as the pronouncements of the Roundtable C.E.O.s. Perhaps that shouldn’t be surprising: The C.E.O.s of BlackRock and Vanguard belong to the Roundtable.



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