Proxy Access Scorecard

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
access provisions.
¤ 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


One Comment Add yours

  1. Great to have Jackie Cook at FundVotes and staff at Nathan Cummings Foundation analyzing these important votes. Another similar report, Proxy Access: New Sense Of Nuisance, uses data from ProxyInsight at My comments:

    Good overview. The biggest new entrant to filing proxy proposals in this area for 2016 will be John Chevedden.

    No one accurately tracks proposals that are filed and withdrawn because the proponent reaches agreement with the company. Typically, companies issue a press release announcing the adoption of proxy access bylaws as if the board took the action on their own volition, without pressure from shareholders. I was involved with many of these last year at companies such as Clorox, Broadridge, Microsoft, United Natural Foods, and Visa.

    Unclear in the article above: St. Jude Medical was the UAW. Kohl’s was CalPERS.

    Spread of proxy access rights will be considerably faster than majority voting requirements for directors. However, it may take several more years to address proxy access “lite” issues. For example, in an attempt to head off my proposal, Apple adopted proxy access bylaws that allow shareholders to nominate one director. Can that really be considered proxy access when it takes two directors on the board to even move an item to the agenda for discussion?

    Shareholders will begin to have an opportunity to move from access lite to access true as my cleanup proposals are voted on, beginning with just a few this year. Will shareholders recognize when they’ve been snookered? It may take several years for that realization to set in. Meanwhile, I hope Proxy Insight continues to track the vote and negotiated withdrawals as best they can. I have found the site very valuable to track proxy votes cast in advance of meetings and to research proxy voting records to determine likely supporters and opponents of proposals I am considering. Keep up the excellent work.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s