Research shows gulf in support for proxy access

Shareholder proposals for proxy access in 2015 – the hottest governance topic in the US last year – generally proved popular, according to research by Proxy Insight.

Proposals issued by the New York City Comptroller, which have already issued 72 proxy access proposals so far in 2016, received an average 55 percent support, say the researchers. Those put forward by other investors received an average 48 percent of votes in favor.

As well as the new resolutions put forward by the New York City Comptroller, Activist Insight says CalSTRS is targeting its top 40 investments.

While proxy access proposals largely seek the right for shareholders to nominate directors if they hold a minimum 3 percent stake for at least three years, there are variations in how many shareholders can group together and what percentage of the board they can nominate.

There are also some big differences in how big institutions view the proposals. Proxy Insight looked at how the 10 largest investors in equities voted on proxy access proposals across 2015. Five institutions – BlackRock, BNY Mellon, T Rowe Price, Legal & General and Norges Bank Investment Management – voted for the proposals more than 90 percent of the time.

At the other end of the scale, Fidelity Management & Research and JPMorgan voted against proxy access on 100 percent of proposals, says Proxy Insight. Northern Trust Investments voted against 98 percent of the time and Wellington Management Company 95 percent of the time.

While Vanguard voted against the majority of the time, the fund had a slightly more mixed record. It voted ‘for’ proxy access in 18 percent of proposals and ‘against’ 82 percent of the time.

Of those largely or completely voting against proxy access, only Fidelity Management & Research specifically states that it does not support proxy access, according to the research. Northern Trust Investments and Wellington Management Company approach the issue on a case-by-case basis, while Vanguard and JPMorgan say they support proxy access but only where the ownership threshold is at least 5 percent.

‘Rarely does a governance topic cause such differences of opinion as proxy access has, with big shareholders divided about its merits; some are concerned about unintended consequences and others are worried about costs,’ comments Proxy Insight managing director Nick Dawson in a press release announcing the findings.