Bloomberg Businessweek - USA (2019-11-18)

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Edited by

Pat Regnier

Proxy voting rules are the new battleground

in a struggle over corporate control

The shareholder vote is fundamental to how publicly

traded companies are run. But the question of who

gets a real voice in a proxy fight is more complicated

than one vote for every share.

Many investors hop in and out of stocks and are

happy to ignore votes. Others hold their stock at one

remove, via a mutual fund or pension. Decisions on

voting those shares are often farmed out to proxy

advisers, specialized companies that provide recom-

mendations to money managers. And while many

investors—and corporate managers—think votes

should focus solely on issues that affect profits and

shareholder returns, others see owning a piece of a

company as an opportunity to weigh in on how it

behaves. About half of shareholder proposals these

days focus on social and environmental issues.

On Nov. 5, the U.S. Securities and Exchange

Commission stepped into this fray by proposing

new rules affecting shareholder votes. One set of

measures would put new regulations on the proxy

advisers, effectively making them run recommen-

dations past companies and give them a chance

to respond before sending the advice to investors.

Business groups backing the plan say the advisers

aren’t transparent enough and have acquired too

much power to sway votes. In 2015, JPMorgan Chase

& Co. Chief Executive Officer Jamie Dimon lashed

out at “lazy” shareholders who just followed proxy

Bloomberg Businessweek November 18, 2019

Is the SEC

Putting Shareholders

In the C orner?