Although supportive of expanding clients’ ability to direct their proxies, State Street’s new “The Role of Long-Term Shareholder Voice” provides thoughtful commentary on the potential unintended consequences of “shareholder democratization” tools such as the new universal proxy rule and other unidentified legislative initiatives purportedly under consideration that aim to “empower” individual investors in the proxy voting arena based on their potential to undermine long--term interests. The post explains the basis for State Street’s increasing support for its portfolio company incumbent directors over the past six years and its tendency to defer to nominating committees’ judgment on board composition, while also identifying the factors it will consider when assessing dissident nominees.
This is a highly recommended read for companies that have State Street in their stock, as well as activist investors seeking State Street’s support for director nominees outside of management’s recommended slate.
See last week’s report: “State Street Speaks” and additional resources on our Institutional Investors page »State Street.
This post first appeared in the weekly Society Alert!