Proxy voting
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Proxy voting refers to the process through which shareholders who do not physically attend corporate shareholder meetings vote on company issues such as executive pay packages, board membership, and other shareholder and management proposals. Typically, proxy voting occurs over the phone, by mail, or online.[1][2]
In the context of public policy, discussions of proxy voting often relate to the question of how public pension boards should vote their proxies on behalf of plan beneficiaries or how governments should instruct their fiduciaries to vote public proxies and what factors are appropriate to consider. Environmental, social, and corporate governance (ESG) considerations are especially relevant to such conversations. Opponents of ESG often argue that only material financial factors should be considered in public proxy votes, while supporters often argue that states should seek to promote ESG corporate policies through their proxies. For more information on the overlap between proxy voting and ESG public policy, click here.[3]
Background
Annual shareholder meetings are important for corporate decision-making and reporting. Before annual meetings, companies typically send shareholders materials with information about the proposals that will be voted on. Examples of common shareholder voting topics include:
- Share ownership and stock splits
- Board of directors personnel and structure
- Executive compensation packages
- Environmental, social, and corporate governance (ESG)
Once shareholders receive the information, they can cast their proxies in favor of or against each of the proposals. Investors can also abstain from votes.
Proxy voting and environmental, social, and corporate governance (ESG)
In the context of ESG public policy, discussions of proxy voting typically relate to whether investment managers should be allowed to consider certain non-financial ESG criteria when voting proxies on behalf of public funds.[3]
For example, some opponents of ESG investing have argued that asset managers for publicly managed funds and retirement systems should only consider material financial factors and expected returns for pensioners in shareholder meeting votes. They argue that public shares should not be voted based on ESG criteria. For more information on the effort to oppose ESG in proxy voting,click here.
Some supporters of ESG argue that public money managers should consider non-financial factors such as environmental and diversity goals in their public investment decisions, including their proxy votes. For more information on the effort to support ESG through proxy voting, click here.
See also
- Sustainability
- Materiality
- Areas of inquiry and disagreement related to environmental, social, and corporate governance (ESG)
- Opposition to environmental, social, and corporate governance (ESG) investing
- Reform proposals related to environmental, social, and corporate governance (ESG)
External links
Footnotes
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