how would you empower small shareholders so they can vote on compensation of CEOs and fund managers?

Most working and retired people have their savings in 401Ks, mutual funds, ETFs, and union funds which are managed by professionals. These same professionals earn monies not much different from the compensation of CEOs. These same professionals vote the shares of the millions of small shareholders on corporate governance, compensation, board of directors, etc. How can small shareholders let their views known to these professional managers so they have a say on how their shares are voted on corporate issues like governance, compensation,etc. I am a Republican, but i cringe each time I read about sign in bonuses, golden parachutes etc. given to prospective or departing CEOs whose claim to fame is solely cutting the number of employees that, of course, will flow in better profits numbers. Anybody can do that without the millions in compensation showered on these CEOs. Is it any wonder that people see this as greed. A mechanism should be found to channel this sentiment in the corporate boardrooms so that board of directors listen to the voice of small shareholders. unfortunately, it is the professional managers who vote the shares of the small shareholders. The interests of the professional managers are not necessarily aligned with those of the small shareholders.

2 Answers

  • Jerry
    Lv 7
    9 years ago
    Favorite Answer

    Individual shareholders now get to vote to approve executive compensation as part of the Dodd-Frank legislation. You should see such a question on proxy materials prior to the annual meeting for any stocks you own.

    A few activist shareholders (some hedge funds, less frequent for mutual funds and pension funds) get directly involved in proxy voting. The vast majority have little or no involvement in voting. This is treated as a corporate back office function. Many mutual funds follow the voting recommendations of ISS (Institutional Shareholder Services).

    Shareholders can write to a company board. Contact information is always in proxy materials.

    You can write to a fund management company or to ISS.

    It would be pointless to write to a portfolio manager because they are rarely the actual voters. Given a typical portfolio of 100+ stocks, and some managers running multiple funds, it would be completely impractical for the portfolio manager to vote each proxy.

    Source(s): retired portfolio manager
  • Anonymous
    4 years ago

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