Comment Letter to DOL/EBSA on Proxy Voting from Jon Lukomnik, Keith Johnson, and other Experts

VEA Chair Robert A.G. Monks and Vice Chair Nell Minow signed this letter (in addition to their own letter) along with 14 other experts. The full letter is below. An excerpt [footnotes omitted].

This letter is written in opposition to the above proposed rule by 16 professionals with more than 400 years of combined experience relating to investment and management of American workers’ retirement savings.  As experienced professionals and academic experts with extensive backgrounds in pensions and investments, we are concerned that the proposal rule (the “proposal”) is based on naïve and outdated early 20th century view of investing that is not fit for the long-term financial interests of American private pension fund participants in the 21st century.

We would not object to a regulatory reminder to private pension fund fiduciaries about existing regulatory guidance that requires them to undertake an evaluation of the costs and benefits associated with exercising proxy voting rights. However, the proposal goes far beyond what is needed, would only create more confusion and exceeds the DoL’s regulatory authority. We think it adopts a regulatory approach to risk management that is similar to pre-ERISA statutory “legal lists” of allowed pension investments. The proposal would encourage ERISA fiduciaries to turn a blind eye toward the role that proxy voting and shareholder voice plays in current mainstream investor practices for management of intangible, long-term and systemic financial risks. We see the likely results as being increased compliance costs and transfer of current risks to younger and future fund participants.


Finance has two main purposes: to provide adequate risk-adjusted returns to individuals and to direct capital to where it is needed in the economy. ERISA investor fiduciaries, like other institutiona l investors, seek to provide a competitive financial return while managing the risk inherent in investing. That is a single function, not two, because risk and return are two equally important sides of the coin. Asset managers attempt to either reduce the risks of investing, or increase the returns, or both.

Unfortunately, the proposal gives little attention to the risk side of that equation. Because many of the proxy voting topics treated as financially immaterial under the proposal have demonstrated risk ramifications for investors with long-term pension obligations, that oversight is a fatal flaw. The proposal essentially places risk management blinders on investor fiduciaries by excessively discounting the value of proxy voting and shareholder voice as an accepted risk mitigation technique.

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