The Nathan Cummings Foundation released today the Proxy Access Scorecard, an analysis of how mutual funds voted on the key issue of “proxy access” at the annual meetings of 84 corporations in 2015. Proxy access allows shareholders to use a company’s proxy statement to nominate candidates for election to its board of directors and is seen as a key vehicle for enhancing board accountability. The Scorecard, compiled with data drawn from Fund Votes and analysis done by the 50/50 Climate Project, exposes a deep division in the mutual fund industry’s approach to proxy access.
Investors and corporate governance experts alike have coalesced around the idea that “proxy access” –
access to a company’s proxy for shareholder nominated directors – is a fundamental shareholder right with
positive implications for firm value. For example, the CFA Institute recently concluded from a review of
academic studies “that proxy access would serve as a useful tool for shareowners in the United States and
would ultimately benefit both the markets and corporate boardrooms, with little cost or disruption to
companies and the markets as a whole.“ The Council of Institutional Investors, a nonprofit, nonpartisan
association of pension and endowment funds representing over $3 trillion in assets, believes “proxy access
would invigorate board elections and make boards more responsive to shareowners and more vigilant in
their oversight of companies.”*
¤ In 2015, the NYC Comptroller’s office submitted “proxy access” shareholder proposals at 75 companies, 43
of which received majority support. Companies were chosen based on risks to shareholder value related to
climate change, diversity, and executive compensation. At least nine additional proxy access proposals
were filed by shareholders in 2015 and over one hundred companies have now adopted meaningful proxy
¤ Despite this unprecedented movement, recent data from the the Securities and Exchange Commission
(SEC) on proxy access votes cast by mutual funds indicates that the industry is deeply divided in its
approach to this fundamental shareholder right.
¤ Of the top 10 mutual fund companies in the U.S., 7 supported proxy access proposals the majority of the
time, with Blackrock, T. Rowe Price, and PIMCO supporting proxy access proposals over 90% of the time.
¤ In contrast, the SEC’s data shows low or no support for proxy access from Vanguard, Fidelity, and
JPMorgan. If these funds had voted for proxy access, the proposal would have likely passed at 17
additional companies, including Exxon Mobil. A higher vote for proxy access would increase the likelihood
that additional companies would modify their by-laws to give shareholders the ability to nominate