The Proxy Voting Choice Revolution is a paper by Alon Brav, Tao Li, Dorothy S. Lund, and Zikui Pan, dated September 12, 2025. It was published by the European Corporate Governance Institute – Law Working Paper No. 875/2025, HKU Jockey Club Enterprise Sustainability Global Research Institute Paper No. 2025/145, available at SSRN: https://ssrn.com/abstract=5500098 or http://dx.doi.org/10.2139/ssrn.5500098.
The paper is an excellent one on a critical topic, fundamentally grounded in the question of who will control American corporations. What I write below is not a formal review. Instead, it represents some quick thoughts to the authors upon first reading. I am sharing them here, in what is essentially my open corporate governance diary. The graphic is part of a report I generated on Iconikapp (my preferred proxy voting choice platform), comparing my S&P 500 proxy votes with those of the Vanguard 500 Index fund. The higher the number for each topic, the closer our votes were aligned. None of the current offerings by the large, mostly indexed funds offer an option focused on reducing externalities or taking a portfolio-wide approach, or that would result in anything like the contrasting results I have obtained by setting my own proxy voting policy.
The Proxy Voting Choice Revolution: The Abstract
A corporate governance revolution is underway. The conventional depiction of U.S. capital markets has focused on the presence of large institutional shareholders and their substantial influence over the economy. But in the past two years, in response to political and public pressure, the largest institutional asset managers have begun to diffuse their power by expanding “proxy voting choice” programs. Our Article explores how these programs could shape institutional shareholder voting and the corresponding governance and performance of public companies for years to come.
More specifically, we provide the first empirical analysis of a large asset manager’s voting choice program, providing a detailed account of the differences between policy offerings as well as their relative uptake by investors. Our empirical investigation also generates insights about the impact of proxy voting choice on the marketplace. It reveals that voting choice has promise, but also significant peril, for investors and the corporate governance ecosystem, particularly in light of a host of incentive issues facing its three key players—asset managers, investors, and proxy advisors. We highlight the thorny choice architecture problems that program designers must confront, ranging from setting the default rule to designing policy menus for rationally apathetic investors. In so doing, we offer concrete policy suggestions for asset managers and regulators, showing how careful calibration of these programs will help ensure that the advent of voting choice benefits investors and the economy, rather than harms them.
The Proxy Voting Choice Revolution: My Quick Comments
First off, it was worrying to see that the proposals John Chevedden and I had at Tesla would have lost if Vanguard’s voting choice program had been fully expanded… not the outcome I had hoped for. Vanguard’s in-house advisors are more rational than Elon Musk’s fanboys, so passing through votes to beneficial owners is certainly not going always to yield the results I want. However, as I explain below, given the current legal definition of fiduciary duty, I think it is the direction we must take.
What follows are a few quick thoughts. The paper pointed it out, but it could be emphasized even more that voting choice programs are being driven mainly by heightened political divisions. Funds want to get out of trouble by being able to claim they are deferring to investor desires.
Yes, it is extremely difficult to design a proxy voting policy that apathetic owners easily understand. Even “fanatics,” like me, can’t find a policy that covers all the possibilities and that I will always agree with.
I appreciate that the paper discussed proxy advisor fees, which, according to many, leads to a box-ticking approach. The authors note that the most significant issues are typically firm-specific. I agree that asset managers are unlikely to pay a significant amount to third-party providers to produce better firm-specific analysis, as doing so would divert resources away from in-house efforts. More importantly, they compete based on low cost. The authors might consider the idea of proxy advisor contests, funded by issuers and voted on by shareholders. See, for example, my proposal of many years ago for a proxy advisor contest at Cisco based on Mark Latham‘s seminal work.
The paper included an interesting discussion of Egan-Jones’ “Wealth-Focused” policy. Yes, we need truth in advertising regarding what that means. Given that sentiment toward management accounts for 56% of the variation in voting, it may be beneficial to require that each voting option indicate its historical divergence from management’s recommendations.
Regarding the recommendation by Fisch and Schwartz that asset managers survey customers versus proxy advisors doing so to sort, I do think an Iconik sort is likely to generate a closer fit than a menu-based system. Even better is the option of voting with a group like As You Sow or Stand.Earth, Third Act, Sierra Club Foundation, or The National Center for Public Policy Research on the iconik platform, and then modifying those policies for the investor’s own use by customizing votes in areas where they differ. Stockholder trust might drive many investors to various third parties… but, as you imply, an investor might trust Greenpeace on environmental issues, but not on corporate governance issues, or on which party to vote for in a contest for control. That’s one reason it is good to be able to customize even after choosing an option, as can be done using iconikapp.
Yes, I agree, too many choices can lead to burnout and lower turnout, so a gatekeeping role for the asset manager is essential. However, I think the primary concern of Fisch and Schwartz is to ensure that the fiduciary duty remains in effect. Since Laster’s decision in our case against Meta’s board, I’m less interested in maintaining the fiduciary duty obligation (other than for conflict-of-interest reasons). Laster said the duty of Meta’s board is to the company and its shares; shareholders are “incidental.”
Reifying shares and giving them more rights than the people who own them would lead to the type of self-destruction Joel Bakan described years ago in his book, The Corporation: The Pathological Pursuit of Profit and Power. Of course, Laster’s decision might have been different if we had sued an asset manager (although I suspect it would not have been). There, the argument that directors need to consider externalities would have become more apparent. Here are a few quick comments from me on the decision at Stanford Law on 11/13 Guest Speaker, with more at Shareholder Primacy and the Meta Decision.
From Fredrick Alexander, the person behind the lawsuit: “First, the Court conceded that no court has previously addressed how the phrase ‘for the benefit of shareholders’ is to be interpreted when most shareholders own diversified portfolios… Second, the decision acknowledged scholarly work showing shareholders will increasingly engage with companies on system-level concerns that implicate portfolio value… Finally, it’s quite notable that although prior cases talk in terms of duties to ‘shareholders/stockholders,’ the Court switched terminology, and held the directors’ duties run to shares themselves.” Alexander concludes: “Intuitively, it makes no sense to establish a fiduciary system that purports to ignore the financial interests of the very people it’s meant to protect. The rules that govern our financial system should be designed to protect the human beings it serves.”
What I haven’t seen discussed much in papers on proxy voting options is the reality that most shareholders are closer to “universal owners” than just being invested in a single company. Most people are only invested through their retirement fund(s) or savings, and those investments are primarily in index funds. That’s why Vanguard, BlackRock, SSGA, and Fidelity are so big. However, none of the voting options currently offered by any of the Big Four appear to explicitly account for the need to reduce negative externalities when voting or take a portfolio-wide approach to increasing value.
Most proxy voting policies are based on second-guessing the board. If we were on the board, this is how we would vote to meet our fiduciary duty to the company and its shares. What we need, instead, are options for real people who are invested in the whole economy through their retirement funds and savings. We need proxy voting that takes a portfolio-wide approach and reduces the negative externalities that must be paid for by real people, their governments, businesses, and the natural environment. More than 75% of the variability in returns to investors is caused by systematic risk. (MBMPT) Reduce those risks, and we increase our returns.
Yet, current voting policies largely overlook this fact. Many corporate governance policies come closer to recognizing it than do E&S policies, because they often take a box-ticking approach. For example, most investors agree that all companies, with rare exceptions, should have a majority voting requirement for unopposed directors, a declassified board, allow shareholders to call special meetings, have proxy access, and should not have supermajority requirements for shareholders seeking to amend their bylaws. Of course, I would also add splitting the roles of CEO and Chair, as well as several other provisions, as core to good corporate governance.
Another issue that deserves a little more attention is who negotiates if or when voting choice devolves from the asset manager’s currently concentrated voting power. Will Vanguard be obliged to aggregate voting choices and negotiate changes with companies based on a combination of those cast through voting choices and those cast based on in-house policies? Of course, if many are delegating their votes to Greenpeace, that puts Greenpeace in a position to request changes at various companies. However, most investors won’t delegate to Greenpeace or any organization unless they have a proxy voting policy that covers a broad range of possibilities. Perhaps we need consortia to combine and offer voting advice through flexible apps like Iconik. We might then choose to vote like the Sierra Club on environmental issues but like Norges or the New York City Comptroller on corporate governance issues. It would be beneficial to have expert organizations formulate the best proxy voting advice for each concern and then negotiate with companies based on the voting strength they muster.
The Proxy Voting Choice Revolution could determine who will control American corporations. Will it be real people, making conscientious decisions, or algorithms focused on short-term market pricing? The Proxy Voting Choice Revolution by Alon Brav, Tao Li, Dorothy S. Lund, and Zikui Pan, effectively addresses numerous essential topics, providing sound caution and valuable advice. However, further discussion is needed.
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