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Two-strike rule and proxy firms
The Coalition's desire to make the two-strike threshold 25% of all shareholders effectively lifts the threshold to unachievable, and therefore meaningless levels - particularly since many/most voters don't bother to vote. Maybe that's the Coalition's intention?
Institutions use proxy recommendations because it's too hard for them to resolve voting strategy, and they don't have the resources to do the work required to determine the issues themselves for all the companies in which they invest.
If the desire is to have institutions determine all voting issues themselves (thereby making the proxy advisors redundant) then there are two options: increase the resources of the institutional investors or make the job of determining the issues easier.
The first option will increase costs and lower margins and is unlikely to happen.
The second option is the most realistic - but how?
If a corporation declares its objectives as being based on quantified shareholder objectives (metrics) then the corporation's performance or non-performance can be easily determined against those metrics.
The majority of issues that require a shareholder vote impact the orgsanisation's ability to deliver its objectives. When managers determine what a corporation will pursue (as they do now), shareholders have little means to determine the underlying issues and the appropriate voting response. This is compounded when those same managers are rewarded by KPIs that they themselves determine.
If the subject of a shareholder vote impacts shareholder-determined required outcomes, the shareholder can much more easily assess the arguments for and against the issue and determine their impacts on required outcomes.
Essentially, this is what proxy firms attempt to do but must struggle with management-derived KPOs, management-incentivised initiatives that may or may not benefit shareholders and they are in complete ignorance of what ALL shareholders really want because no one asks them. No wonder it's hard to determine the appropriate voting strategy on most issues.
Institutions use proxy recommendations because it's too hard for them to resolve voting strategy, and they don't have the resources to do the work required to determine the issues themselves for all the companies in which they invest.
If the desire is to have institutions determine all voting issues themselves (thereby making the proxy advisors redundant) then there are two options: increase the resources of the institutional investors or make the job of determining the issues easier.
The first option will increase costs and lower margins and is unlikely to happen.
The second option is the most realistic - but how?
If a corporation declares its objectives as being based on quantified shareholder objectives (metrics) then the corporation's performance or non-performance can be easily determined against those metrics.
The majority of issues that require a shareholder vote impact the orgsanisation's ability to deliver its objectives. When managers determine what a corporation will pursue (as they do now), shareholders have little means to determine the underlying issues and the appropriate voting response. This is compounded when those same managers are rewarded by KPIs that they themselves determine.
If the subject of a shareholder vote impacts shareholder-determined required outcomes, the shareholder can much more easily assess the arguments for and against the issue and determine their impacts on required outcomes.
Essentially, this is what proxy firms attempt to do but must struggle with management-derived KPOs, management-incentivised initiatives that may or may not benefit shareholders and they are in complete ignorance of what ALL shareholders really want because no one asks them. No wonder it's hard to determine the appropriate voting strategy on most issues.
posted by jcg
at
08:12
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