Cynthia Simon, Policy Director
Shareholder Rights Group
Bloomberg opinion columnist Matt Levine misses the mark in his September 24, 2024 commentary on Vanguard’s pass-through voting option for its investors. Levine’s assertion that investor votes on shareholder proposals are of little value and merely symbolic ignores the impact these proposals have actually had on corporate behavior. It also fails to account for the sheer heft providing voting choice to Vanguard’s 50 million investors[1] could have on voting outcomes.
While correct that proposals are not binding on companies, this does not mean their value is symbolic. In many cases, companies choose to respond positively. In fact, over the last 10 years, an average of roughly 40% of proposals each year were withdrawn because the company agreed in some part to the request being made.[2] When there is a vote, the outcome can give a company a clear signal of the sentiment of its larger investor base. Proposals have led to many of the best practices in protecting investor rights as owners of companies, such as independent directors and majority voting, as well as an increase in sustainability reporting. Proposals have raised the visibility of issues such as climate change, human rights and workforce health and safety in cases where companies have chosen to ignore them. Climate change in particular has been a frequent topic of proposals.
With 24% of respondents in Vanguard’s pilot choosing an ESG strategy, the company’s commitment to expand participation could, over time, shift a not inconsequential amount of its $9.5 trillion in assets[3] to support, say, proposals on climate change--an issue, by the way, of concern to environmental activist celebrities Ryan Reynolds, Oprah and Taylor Swift, who just might be willing to put their name on a Voting Choice option for an affordable amount. Shareholder proposals are that valuable.
James McRitchie
Shareholder Advocate
Corporate Governance
You recently argued that proxy voting is too hard and, therefore, not rational for retail investors. But the iconikapp.com voting service automates it, allowing even small retail investors to follow other policies as pictured below or create their own. The system has automatically voted hundreds of proxies for me. Here's an example: Sierra Club policy.
"Rational apathy" isn’t rational when setting up your own proxy voting policy is this easy. I love most of what you write but you are outdated on this issue. Yes, iconik's system isn’t perfect, but it gets most people 90% there and only “wastes” the few minutes it takes to set it up initially. No further effort is needed.
This technological development is even more important considering Laster’s decision in McRitchie v Zuckerberg that directors have a fiduciary duty to the company and its shares — shareholders are “incidental.” We become a little less incidental to directors when we vote.