New Study Looks at Use of Proxy Advisors by Mutual Funds
Once again in the 2012 proxy season, we find ourselves spending a great deal of time focused on the voting recommendations of proxy advisory services, and now with the advent of Say-on-Pay, writing public rebuttals of the analysis and recommendations of those services. Much of the effort today is focused on convincing large institutional holders that they should support a Say-on-Pay proposal or a vote for the election of directors, notwithstanding the proxy advisor's recommendation.
A recent study commissioned by the Investor Responsibility Research Center (IRRC) Institute and conducted by Tapestry Networks reviewed the voting decision-making process at 19 North American mutual funds, accounting for over $15.4 trillion in assets under management. While the study found no standard approach to voting decision-making, it did find that proxy advisory firms represent on important input - but not the only input - that these mutual funds rely on in making their voting decisions. Among the findings in the study are that:
- The role of proxy advisory firms as data aggregators has become increasingly important to asset managers.
- Asset managers find the proxy advisor data particularly useful in Say-on-Pay and international votes.
- The influence of proxy advisors extends beyond just the voting decisions to the formulation of voting policy.
- The demand for engagement with investors will continue to grow.
The study also notes the extent to which proxy advisory firms influence issuer behavior outside of the voting cycle, including changes to the terms of executive pay plans.
For anyone who has spent a lot of time with their proxy solicitor trying to turn around a director election or Say-on-Pay vote in the face of an adverse ISS recommendation, the results of this study are not that surprising. Nonetheless, the study does provide some useful insight into the influence that proxy advisory firms have on the process and how asset managers use these services today.
Mailed: May-June Issue of "The Corporate Executive"
We just mailed the May-June Issue of The Corporate Executive, and it includes pieces on:
- Valuing Market-Based Awards
- Accounting for Retirement Provisions in Performance Awards
- Accounting for Vesting Commencement Before Grant Date
- Upcoming Tax Rate Changes (Or, the More Things Change, the More They Stay the Same)
- New Regs Expected Under Section 162(m)
Act Now: Get this issue rushed to when you try a "1/2 Price for Rest of 2012" No-Risk Trial to The Corporate Executive.
Deal Cube Tournament: Round One; 12th Match
As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:
- Dave Lynn