Comments
I know a bit about the proxy advisory ecosystem, so I can provide something of a generic summary, though nothing specific to EA.
In the U.S., there are five different companies that advise institutional investors about how they should vote their shares: Institutional Shareholder Services, Glass Lewis, Egan-Jones, Segal Marco Advisors, and ProxyVote Plus. However, Institutional Shareholder Services (ISS) has around 61% market share, and Glass Lewis has another 36%, so the industry is quite concentrated. While ISS guarantees its clients 100% portfolio coverage (and as a result, produces research reports addressing pretty much every proxy ballot item on the planet each year), many of its smaller competitors offer narrower, more specialized services. For instance, Segal Marco advises primarily labor union pension funds, and there are a few other proxy advisors outside of the U.S. that specialize in companies listed in the country in which they are located.
ISS (like most of its competitors) offers its clients voting recommendations determined through the application of a defined voting policy selected by the client in question. While the plurality of its clients use its benchmark policy, which is focused on long-term shareholder value creation, ISS also offers a number of specialized policies targeted at investors concerned about corporate social responsibility, sustainability, labor interests, etc. For clients who feel that none of ISS’s preexisting policies fit their particular goals, ISS offers custom policies that clients can develop collaboratively with its advisors.
Assuming you are not an institutional investor, you will probably have a hard time accessing ISS’s proxy research (or that of any of its competitors) at a cost-effective price. In light of that, I’d refer you to two other organizations that work in the corporate governance space. The first is As You Sow. It runs shareholder campaigns at companies to promote largely environmentalist goals (though it does work in a few other areas, as well). If you own shares in any of the companies that it is targeting, you might be interested in taking a look at its campaign materials and considering them in the context of EA, your own values, etc.
The second organization is CtW Investment Group. It runs governance advising and shareholder campaigns on behalf of a coalition of U.S. labor unions on a broadly similar model to As You Sow, though it is more focused on worker interests and general good governance norms than on environmental concerns (by virtue of the stakeholders it represents). Like As You Sow, its campaign materials are publicly available online and might be worth reviewing if you’re voting a proxy at a targeted company. Both of these organizations are considered to be highly credible in the governance space, and while there’s room for disagreement about certain elements of their respective agendas, their research is considered to be of a reasonably high quality.
I'm sorry to say this, but unless your "substantial sum" is many billions of dollars, or hundreds of millions invested in a small number of firms (i.e. not in mutual funds), voting is likely largely be a waste of your time. It might be worthwhile for you to estimate what % of the vote you have in a typical company - my guess is it is very small. Worse, unlike in a political election where both sides tend to be roughly equally balanced, and hence the marginal voter can make a difference, as a first approximation pretty much all shareholder votes come in two flavours:
Obviously there are exceptions (notably, activist hedge funds!) but I would expect these two cases to cover the vast majority of the proxy solicitations you receive.
For reference, I worked for a fund that invested billions of dollars, was one of the top shareholders in many companies we owned, and I regularly met with CEOs... but I think our ability to influence their strategy was very minimal. I can only think of one time where I think there is a >1% chance I had an impact.
While it’s certainly true that in most instances, a retail shareholder’s participation will have no impact whatsoever on the outcome of a proxy vote, I think this breakdown of proxy proposals may obscure more than it clarifies. After all, the biggest reason why an individual shareholder’s votes typically make no difference is because the vast majority of ballot items each proxy season are uncontested. Presumably, thecommexokid is not wondering how they should vote on those. And with respect to meaningfully contested ballot items, I think it’s probably not quite right to say that the majority are proposed by cranks. Among other things, only about a quarter of shareholder proposals are proposed by retail shareholders of any variety. (It’s worth noting that in the U.S., companies regularly receive the SEC’s permission to exclude genuine crank proposals from their proxy statements on a variety of legal grounds.)
The vast majority of shareholder proposals in the U.S. fall into one of three categories: requests for certain kinds of disclosures (e.g. of environmental impact, of lobbying expenditures, of pay equity data, etc.), changes to technical governance rules (e.g. the requirements for proxy access or for calling a special meeting), and activist hedge funds seeking to replace members of a board of directors. In most cases, these are proposed in the context of some kind of organized campaign. This doesn’t guarantee that the vote will be close (obviously, many such campaigns are not meritorious), but it does mean that more often than not, the contested shareholder proposals that make it onto companies’ proxies have non-trivial support within the shareholder base. Consider, for instance, that around 37% of proposals submitted by public pension funds passed in 2017, as did 20% of proposals submitted by hedge funds. Moreover, sometimes, those votes do end up being quite close! And even if a vote fails (by a modest margin), it can send a powerful signal to the management and the board. Notably, whenever an executive pay package receives less than around 70% shareholder support in the U.S., there is a strong norm (supported by the major proxy advisors) for the company to propose a more modest package the following year.
Admittedly, the domains on which shareholders can exercise influence through the proxy process do not lend themselves to promoting the kinds of change that a socially concerned (or EA-focused) investor might like to see (in the U.S., the operations of the company are strictly off-limits). However, it isn’t difficult to imagine a story in which a particular shareholder’s vote mattered in bringing about a meaningfully positive outcome. If a person is already inclined to look into this stuff—perhaps because they find it interesting and have a bit of free time—I don’t think it’s unreasonable to try one’s best to use this resource, however modest, to bring about some good. After all, hedge fund activism in particular can be quite high-stakes. It’s plausible that it really does matter in some of those cases that the right side wins. And as far as disclosure campaigns go, making more information available to researchers, investors, employees, and consumers seems likely to, more often than not, improve the function of markets and maybe even advance the social good.
Thanks, good comment!