Fiduciary Duties And Proxy Voting Oversight

Congress and the Securities and Exchange Commission (SEC) are once again focusing on corporate pushback against proxy voting practices of institutional investors and their proxy voting advisors. However, largely missing from that debate has been an understanding of the investor fiduciary duties which apply to management of proxy voting. This presents major public policy risks for pension funds and other long-term investor fiduciaries with obligations that extend across generations and require creation of sustainable value. Misinformed regulatory interventions that impede the independent communication between shareholders and boards that is provided by proxy voting or which disrupts the state law corporate governance balance between management, boards and shareholders could have serious consequences. This article provides an up-to-date overview of the fiduciary duty principles which underlie proxy voting and offers related guidance for pension fund fiduciaries. We