05/2019 KIPLINGER’S PERSONAL FINANCE 9AHEAD
THIS PROXY SEASON, BIG
mutual fund companies
and investors alike will
get a chance to make their
voices heard by corporate
executives on key issues.
Shareholders will likely
file 800 to 900 proposals—
also called resolutions—this
year with the goal of bring-
ing a variety of initiatives
to a vote at annual share-
holder meetings. Top issues
for 2019 proposals includeclimate change, corporate
political contributions and
gender diversity on execu-
tive boards. Although man-
agement isn’t obligated to
act after the shareholders
vote on such proposals,
a majority vote in favor of
a resolution sends a power-
ful message that executives
often heed. Last year, for
instance, a 69% vote in favor
of disclosures on firearm
safety at gunmaker SturmRuger prompted the firm to
follow suit. In 2017, Exxon-
Mobil agreed to produce
reports on climate change
after 62% of shareholders
voted for the proposal.
Those resolutions were
noteworthy not only be-
cause of the results but also
because of who voted in
favor of them: major mutual
fund providers. Until 2017,
firms such as Vanguard,
BlackRock and State Street
(which collectively manage
about $14 trillion in inves-
tor assets) typically either
voted their proxies in favor
of executives or stayed
above the fray entirely.
“Mutual fund companies
are recognizing that issues
such as climate change
represent risks that affect
these companies’ bottomlines,” says Heidi Welsh,
executive director of the
Sustainable Investments
Institute, an investing
research firm.
Still, she expects mutual
fund firms to stay away
from more politicized is-
sues, such as immigration
policy and corporate politi-
cal spending. Mutual fund
voting has boosted support
for environmental and sus-
tainability-focused share-
holder resolutions. The
average vote in favor of such
proposals reached a record-
high 24% in 2018, up from
15% a decade earlier.
Companies must also
consider another important
shareholder group: their
own employees. Once a perk
reserved for executives,
stock-based compensationSHAREHOLDERS ARE
SHAKING THINGS UP
Hot-button issues this year include climate
change and board diversity. BY RYAN ERMEY
TOPIC AILLUSTRATION BY JAMES STEINBERG