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Proxy voting

Proxy voting is a procedure in which a voter delegates authority to another individual or entity to cast a vote on their behalf, typically to accommodate absence from a meeting or assembly while preserving the right to participate in decision-making. This mechanism is most prominently applied in corporate governance, where shareholders unable to attend annual meetings authorize proxies to vote on critical issues such as director elections, mergers, and compensation packages.^[1]^[2] It also features in certain legislative contexts, allowing members to designate substitutes for quorum-dependent proceedings, and in limited electoral systems like the United Kingdom's provisions for proxy ballots in national elections.^[3]^[4] In shareholder contexts, proxy voting facilitates broad investor engagement, with institutional funds often relying on specialized advisors to formulate recommendations, though this practice has intensified scrutiny over potential conflicts of interest and misalignment with individual shareholder priorities.^[5] Regulatory frameworks, such as those from the U.S. Securities and Exchange Commission, govern proxy solicitations and disclosures to ensure transparency, while the Department of Labor imposes fiduciary standards on plan managers exercising proxy rights in employee benefit funds.^[6]^[7] Notable controversies include the expansion of proxy voting in the U.S. House of Representatives amid the COVID-19 pandemic, which permitted remote delegation and faced legal challenges for arguably circumventing constitutional quorum requirements and diminishing accountability through physical presence.^[8]^[9] Critics contend that such adaptations, while pragmatically motivated, risk eroding deliberative processes central to representative bodies, highlighting tensions between accessibility and the integrity of direct participation.^[10]

Definition and Principles

Core Mechanisms

Proxy voting constitutes the delegation of a principal's voting authority to a designated agent, enabling the agent to cast the principal's vote in decision-making forums such as shareholder assemblies or parliamentary sessions when the principal's physical presence is impossible. This mechanism operates through a formal proxy instrument, typically a written statement or electronic form, that explicitly grants the agent power to vote according to either binding instructions provided by the principal or the agent's discretionary judgment on unspecified matters.^[11]^[12] Central to this process is the revocability of the proxy, which empowers the principal to withdraw the delegation at any point before the vote is executed, thereby safeguarding the principal's ultimate control and intent. Authentication entails rigorous verification of the principal's authorization, often requiring a manual signature, notarization, or digital signatures with cryptographic validation to confirm authenticity and prevent forgery.^[13]^[12] Operational integrity further demands prohibitions against proxy abuses, notably chain delegation where the agent transfers voting authority to a third party, as this risks fracturing the direct link between principal and vote outcome, potentially allowing self-interested manipulation or vote inflation. Such restrictions enforce a singular agency chain, ensuring the agent's actions remain tethered to the principal's original directive rather than proliferating unchecked.^[12] Proxy voting fundamentally differs from absentee and mail-in voting, where the principal directly submits their own ballot remotely without intermediary execution.^[14] ^[15] In proxy voting, the principal grants explicit authority to a third party, known as the proxy holder, to cast the vote on their behalf at a specific meeting or event, introducing an agency relationship that relies on the proxy's fidelity to the principal's instructions or discretion.^[16] ^[17] This delegation can include binding instructions or general authority, but the vote's execution occurs through the proxy rather than direct transmission from the principal.^[18] Unlike delegated voting in systems such as liquid democracy, proxy voting lacks inherent transitivity, where delegates can further re-delegate votes, and typically does not feature per-issue conditionality or revocability during proceedings.^[19] ^[20] Liquid democracy emphasizes fluid, voter-controlled delegations that can cascade and adapt dynamically, blending direct and representative elements, whereas traditional proxy voting establishes a static authorization for predefined scopes, often limited to a single assembly or ballot set.^[21] ^[22] Proxy voting also contrasts with real-time participation methods, including virtual or electronic attendance, by mandating pre-event authorization rather than enabling contemporaneous engagement or adjustment.^[23] ^[24] The principal's role ends with granting the proxy, forgoing opportunities for live input, which underscores proxy voting's reliance on advance trust in the agent over interactive oversight.^[25] This structure can diminish direct accountability, as the proxy's actions may deviate from the principal's intent due to informational asymmetries or external influences, a risk amplified in high-stakes contexts like shareholder meetings where proxy advisors shape outcomes.^[26] ^[27] Empirical analyses of corporate proxy contests indicate such agency frictions can distort vote transmission, with robo-voting and advisory recommendations correlating to reduced alignment with individual shareholder preferences.^[28]

Historical Development

Origins in Corporate and Parliamentary Contexts

Proxy voting emerged in mid-19th-century United States corporate law as a response to the challenges of dispersed shareholder ownership in large-scale enterprises, particularly railroads, where physical attendance at meetings was often impractical due to geographical spread fostered by industrialization.^[29] Early railroad charters, such as those for the Mohawk and Hudson Rail Road (incorporated 1826 in New York) and the Danville and Pottsville Rail Road (1826 in Pennsylvania), outlined voting provisions, permitting proxies only if explicitly authorized to ensure governance scalability amid expanding operations.^[30] By the 1850s, states like New Hampshire regulated proxy use in railroads—enacting a 1856 law limiting individual proxyholders to no more than 50 votes—to address concentrations of influence while enabling efficient decision-making for absentee owners.^[31] This mechanism prioritized operational efficiency over the ideal of direct personal representation, allowing corporations to function despite logistical constraints but introducing risks of delegated authority being aggregated and potentially manipulated. In parliamentary settings, proxy voting developed more cautiously, with limited application in UK House of Commons committees by the early 1900s to accommodate absences in deliberative subgroups, though main chamber divisions traditionally eschewed it in favor of pairing arrangements to preserve direct accountability.^[32] Unlike corporate contexts, where proxies facilitated broad participation in profit-driven entities, parliamentary use emphasized procedural continuity in oversight bodies without extending to plenary votes, reflecting a balance between practicality and the personal duty of legislators. By the 1920s, US experiences with proxy solicitation abuses—such as the buying and selling of proxies in speculative markets—prompted state-level interventions to formalize rules and mitigate manipulation, as seen in New York's legislative prohibitions on proxy trading to safeguard shareholder autonomy.^[33] These developments underscored proxy voting's causal roots in economic expansion's demands for adaptable governance, yet highlighted early trade-offs: while enabling representation for distant stakeholders, it deviated from unmediated voting, fostering conditions for later proxy fights and regulatory scrutiny without resolving inherent principal-agent tensions.^[34]

Expansion in the 20th and 21st Centuries

The Securities Exchange Act of 1934 introduced federal regulation of proxy solicitations in the United States, requiring public companies to disclose material information to shareholders when seeking proxies for voting on corporate matters, thereby standardizing practices amid growing dispersed ownership in corporations.^[35] This framework facilitated proxy voting's role in enabling institutional investors to influence governance without physical attendance, correlating with the post-World War II expansion of equity markets and multinational firms.^[33] In the latter half of the 20th century, proxy voting extended beyond U.S. corporate boards to international contexts and nonprofit organizations, often mirroring corporate models to accommodate absentee members in associations and cooperatives. For instance, nonprofit bylaws increasingly incorporated proxy provisions to enhance participation, as dispersed membership grew with urbanization and professionalization, though empirical analyses note persistent challenges in verifying proxy authenticity without robust auditing.^[36] Globally, post-1960s economic liberalization prompted adoption in emerging markets, with proxy mechanisms integrated into shareholder rights under frameworks like the OECD Principles of Corporate Governance (1999 onward), emphasizing transparency to mitigate agency problems in cross-border investments. The 21st century accelerated proxy voting through digital platforms, enabling electronic solicitation and execution, as seen with systems like Eligo, which since the 2010s has supported verifiable remote proxies for organizations via encrypted protocols, though studies highlight risks of coercion and unverifiable chains in unmonitored electronic systems.^[37] The COVID-19 pandemic in 2020 prompted temporary expansions in legislative settings, such as the U.S. House of Representatives authorizing proxy voting for members via H.Res. 965 on May 15, allowing remote delegation during quarantines while requiring written designations to designated proxies.^[38] This shift underscored globalization's role in broadening proxy use but revealed integrity vulnerabilities, with empirical reviews of remote voting indicating higher fraud potential absent end-to-end verification, as chain-of-custody breaks can undermine causal links between voter intent and recorded outcomes.^[39]^[40]

Implementation Procedures

Proxy Solicitation and Documentation

Proxy solicitation constitutes the initial phase of securing voting authority, wherein issuers or proponents disseminate proxy materials—encompassing statements delineating proposed resolutions, supporting rationales, financial data, and execution guidelines—to potential grantors, commonly through postal mail or secure digital platforms to ensure accessibility and auditability.^[41] In jurisdictions with regulatory oversight, such as under U.S. Securities Exchange Act Rule 14a-3, these materials must include or precede an annual report to security holders, clearly identifying each matter for action and filed preliminarily with authorities to permit review for completeness before definitive distribution, typically allowing at least 10-21 days for shareholder consideration depending on filing timelines.^[42] Proxy documentation varies in form to balance delegation flexibility and precision: blanket proxies confer discretionary power to the holder for undecided issues, enabling adaptive voting aligned with the grantor's general intent but risking divergence if not monitored; directed proxies, conversely, mandate adherence to specified instructions only, curtailing discretion to minimize agency conflicts at the cost of rigidity for unforeseen agenda items.^[43] Authentication of these instruments demands verifiable assent, historically via manual signatures or notarization for evidentiary integrity, but since the enactment of the U.S. Electronic Signatures in Global and National Commerce Act (ESIGN) on June 30, 2000, electronic signatures attain equivalent legal validity when demonstrating clear intent, record retention, and non-repudiation through methods like digital certificates or audit trails.^[44] From causal reasoning grounded in empirical patterns, robust solicitation and documentation prioritize transparency to counteract solicitation pressures or informational deficits that could induce undue influence; research indicates that heightened information asymmetry in disclosures correlates with increased abstention rates—such as in say-on-pay resolutions where opaque materials elevate non-participation by amplifying uncertainty and perceived risks of misalignment.^[45] This underscores documentation's role in empirical efficacy, as verifiable, detailed proxies reduce uninformed delegations, with studies attributing up to several percentage points in abstention variance to disclosure quality in shareholder votes.^[45]

Validation and Execution Rules

Validation of proxy votes requires verification of several key elements to ensure legitimacy and prevent abuse. Proxies must be properly executed with the principal's signature or equivalent authentication, bear a valid date, and clearly specify the matters to be voted upon, as mandated by regulations such as U.S. Securities and Exchange Commission (SEC) Rule 17 CFR § 240.14a-4, which requires bold-face indication of the solicitor and designated spaces for dating and voting preferences.^[46] Timeliness is assessed by confirming receipt before the deadline, typically 48 hours or as stipulated in corporate bylaws or proxy statements to allow for processing and auditing.^[24] Revocation status is checked, as proxies remain valid unless superseded by a later-dated proxy, written notice of revocation, or the principal's physical attendance and voting at the meeting, rendering prior proxies irrevocable only if explicitly designated as such under limited circumstances like coupled with security interests.^[47] Conflicts of interest are scrutinized to confirm the proxy agent's adherence to the principal's instructions, prohibiting votes contrary to specified directives; discretionary authority is narrowly confined to matters not listed in the proxy statement or unforeseen issues, such as nominee unavailability, provided proper notice was given at least 45 days prior for annual meetings.^[46] Execution entails the proxy holder or tabulator aggregating votes precisely as instructed, with mechanisms like checkboxes on proxy cards enabling specification of approval, disapproval, or abstention, ensuring no aggregation or alteration beyond the granted authority.^[48] To mitigate corruption risks, rules in most jurisdictions explicitly bar pairing proxies with others for bloc voting or trading them as commodities, treating such practices as potential solicitations subject to anti-fraud provisions under laws like Section 14 of the Securities Exchange Act of 1934, which prohibits deceptive proxy practices without authorizing transferability.^[49] Investment advisers overseeing execution must maintain policies for oversight of proxy firms, including error resolution and conflict checks, to align votes with fiduciary duties.^[48] Empirical research underscores the necessity of stringent auditing, revealing that procedural lapses in validation contribute to voting discrepancies, thereby necessitating causal safeguards like independent verification to uphold outcome integrity.^[50]

Applications in Formal Governance

Legislative Settings

In legislative settings, proxy voting permits elected representatives to delegate their vote to another member, typically for committee proceedings or limited floor actions, facilitating continuity amid absences such as illness or family obligations while preserving quorum requirements.^[51] This practice contrasts with broader electoral delegation by focusing on intra-legislative delegation among peers, often governed by chamber rules that prohibit proxies from circumventing attendance mandates for final passage or quorum establishment.^[52] Empirical analysis of its implementation reveals correlations with prior member abstention patterns, suggesting proxies may enable participation from less consistently engaged legislators, potentially accelerating decisions at the cost of reduced direct deliberation.^[53] In the United States Senate, standing committees possess broad discretion under Rule XXVI to authorize proxy voting for most actions, a precedent dating to at least the mid-20th century, though proxies are barred for reporting bills or nominations to the floor and require written designation to the chair.^[52] Individual committees tailor rules; for instance, the Judiciary Committee permits proxies for votes but mandates a quorum of members present for business, excluding proxies from counting toward it.^[54] This flexibility supports routine committee efficiency, with over 16 standing committees employing variants as of 2015, though floor proxies remain unconstitutional per precedents emphasizing physical presence for Article I quorum calls.^[52]^[55] The U.S. House of Representatives historically restricted proxies to committees, but in May 2020, amid the COVID-19 pandemic, H. Res. 965 authorized remote proxy voting for floor proceedings until August 18, 2020, with extensions debated; members designated a single proxy via written form, enabling 216 members to proxy-vote in some sessions and passing 459 bills in the 116th Congress despite disruptions.^[10] This expedited legislative output but faced Republican-led challenges alleging diminished debate and accountability, with data showing proxy users averaged higher 2019 abstention rates (positively correlated at p<0.05), implying potential for less rigorous scrutiny in delegated votes.^[53]^[10] In the United Kingdom House of Commons, proxy voting is narrowly permitted to avoid quorum evasion, with a 2019-2020 pilot for parental leave expanded permanently on September 23, 2020, allowing designated MPs to vote on behalf of absent members in divisions via paired nominations submitted to the Speaker.^[56] Proxies count toward recorded votes but not physical quorum, limited to specified absences like childbirth, and require public disclosure to maintain transparency; this addressed gender equity concerns but preserved restrictions against general use, as broader application could undermine debate attendance.^[57] Similar constrained allowances exist in other parliamentary systems, such as Northern Ireland's Assembly for select ballots, emphasizing targeted delegation over routine practice.^[58] Across these contexts, proxy mechanisms demonstrably sustain legislative momentum during targeted disruptions but invite critiques of diluted interpersonal accountability, with no large-scale studies isolating causal impacts on policy quality beyond procedural speed.^[53]

Corporate Shareholder Contexts

Proxy voting in corporate shareholder contexts primarily facilitates participation in annual general meetings and special meetings of public companies, where shareholders vote on director elections, executive compensation approvals such as say-on-pay resolutions, and other governance proposals without physical attendance. In the United States, regulated under Securities and Exchange Commission (SEC) rules, proxy solicitation involves distributing proxy statements detailing agenda items and voting instructions, often processed through intermediaries like Broadridge Financial Solutions. This mechanism is essential for dispersed ownership in public firms, enabling efficient aggregation of shareholder votes on routine and contested matters. Data from Broadridge indicates that proxy voting dominates corporate elections, with 94.3% of shares held in street name processed through proxy systems during the 2023 proxy season, reflecting high reliance on absentee balloting for director elections and say-on-pay votes. Retail shareholder participation remains low at approximately 29.6% of held shares voted in 2023, compared to 80.1% for institutional investors, underscoring proxy voting's role in channeling institutional preferences. This disparity amplifies the influence of large asset managers like BlackRock and Vanguard, who control significant equity stakes and vote cohesively, often prioritizing governance reforms that may not align with retail investors' longer-term or diversified interests, as documented in analyses of voting behavior differences on specific proposals.^[59]^[2]^[60] Proxy contests, or battles for board control, exemplify intensified proxy voting dynamics, where activist investors nominate dissident directors to challenge incumbents. Notable examples include Nelson Peltz's 2024 campaign at Disney, seeking three board seats to critique strategic decisions but ultimately defeated by a coalition of management and institutional votes, and Starboard Value's 2024 push at Pfizer amid post-COVID performance scrutiny. Such fights can realign management with shareholder value creation by highlighting inefficiencies, yet studies critique them for fostering short-termism, as activists frequently advocate asset sales or cost cuts yielding immediate gains at the expense of sustained investment, with evidence of heightened stock volatility and reduced R&D post-contest in affected firms. In 2025, campaigns like those at Air Products saw partial activist successes despite concessions, illustrating how proxy voting empowers concentrated institutional power while retail voices, diluted by low turnout, rarely sway outcomes.^[61]^[62]^[63]^[64]

Nonprofit and Association Governance

In nonprofit organizations and voluntary associations in the United States, proxy voting is typically authorized only if explicitly permitted by the organization's bylaws, overriding default parliamentary procedures such as those in Robert's Rules of Order, which deem it incompatible with deliberative assemblies unless bylaws provide otherwise.^[13]^[65] This mechanism enables absent members to delegate their voting authority to another participant, facilitating quorum attainment and decision-making in settings characterized by low attendance, such as member meetings for homeowners associations (HOAs) or trade unions, where priorities center on collective governance rather than financial returns.^[66] In HOAs, state-specific statutes and governing documents often regulate proxies, requiring them to specify the meeting details, be dated and signed, and limit duration to avoid undue influence, as seen in Florida's requirements for validity up to 11 months.^[67]^[68] Proxy voting enhances participation in these entities by allowing members facing scheduling conflicts—common in volunteer-driven groups—to influence outcomes on issues like budget approvals or rule changes, thereby promoting broader representation without compelling physical presence.^[69] For instance, in HOAs, proxies bridge attendance gaps at annual meetings, where low turnout might otherwise stall community decisions, and in unions, they align with democratic principles by enabling absent workers to delegate on contract ratifications or leadership elections.^[70]^[71] However, this practice carries risks of manipulation, as active minorities can solicit and consolidate proxies, potentially capturing outcomes and sidelining less engaged members, which undermines the deliberative intent of face-to-face assembly.^[66] Critics argue it reduces opportunities for debate and informed revision, fostering decisions based on pre-committed votes rather than evolving discussion.^[13] Disputes over proxy validity frequently arise in these contexts due to ambiguities in bylaws, improper execution, or challenges to eligibility, leading to contested elections and legal challenges that strain resources in resource-limited nonprofits.^[72] In HOAs, for example, invalid proxies—often due to missing signatures or expired dates—have prompted verification protocols and occasional court interventions to ensure fairness, highlighting the need for clear documentation to mitigate abuse.^[73] While proxy use has supported efficiency in maintaining governance continuity, such as avoiding meeting failures in dispersed associations, evidence from governance reviews indicates it can dilute individual accountability, as proxy holders may not fully represent the delegator's nuanced views, prompting some organizations to prefer alternatives like absentee ballots for better control.^[69]^[18]

Proxy Voting in Electoral Systems

General Legal Frameworks

Proxy voting in national elections is permitted in only a select few electoral systems, generally limited to voters who meet stringent legislative criteria, such as documented physical infirmity, military service, or overseas residence that precludes attendance at polling stations. Eligible individuals must submit formal applications to electoral authorities, nominating a designated proxy who themselves qualifies as a voter and adheres to caps on the number of proxies they can represent, ensuring oversight and preventing undue concentration of voting power.^[74] These frameworks prioritize verification processes, including identity checks and documentation of the voter's inability to vote in person, to mitigate risks while extending access beyond standard in-person requirements. Proxy arrangements contrast with more common alternatives like postal or early voting, which avoid direct delegation and thus face fewer agency-related vulnerabilities.^[74] The scarcity of proxy voting stems from entrenched concerns over electoral integrity, particularly the facilitation of fraud through chain voting, whereby a proxy supplies a pre-marked ballot to a voter, who casts it and returns a blank one for reuse, enabling serial manipulation without traceability. Jurisdictions implementing or considering proxy mechanisms often enact explicit prohibitions against ballot exchanges or unrestricted proxy discretion to avert such schemes, reflecting a causal prioritization of ballot secrecy and individual autonomy over expanded delegation.^[74]^[75] Proponents underscore proxy voting's utility in bolstering turnout among constrained voters, arguing it upholds democratic equity without necessitating physical presence. Opponents counter that inherent principal-agent problems—such as potential coercion, influence peddling, or proxies disregarding specified instructions—erode voter sovereignty and invite abuse, even if aggregate fraud incidence in analogous absentee modalities proves low per forensic audits and observer reports.^[74]^[76]

Practices in Selected Democracies

In the United States, proxy voting—where one voter casts a ballot on behalf of another at a polling station—is generally prohibited in federal and most state elections to mitigate risks of fraud and ensure personal accountability in voting. Exceptions are narrowly confined to absentee ballot provisions for military personnel and overseas citizens under the Uniformed and Overseas Citizens Absentee Voting Act of 1986, which facilitates mail-in or electronic transmission of ballots but does not authorize in-person proxy delegation. During the 2020 elections, amid the COVID-19 pandemic, some states temporarily expanded no-excuse absentee and mail-in options, prompting subsequent fraud investigations and policy reversals in jurisdictions like Georgia and Pennsylvania, where audits revealed irregularities in ballot handling that underscored vulnerabilities in non-proxy remote systems, though direct proxy use remained barred.^[77]^[78] In the United Kingdom, proxy voting for parliamentary general elections is permitted but strictly regulated under the Representation of the People Act, with eligibility limited to voters unable to attend polls due to physical incapacity, absence for work or service, or other approved reasons, requiring advance application to electoral authorities. This framework, shaped by amendments including those in 1985 addressing prior abuses in proxy solicitation, caps proxies at one per voter and mandates verification to prevent multiple or fraudulent delegations. Approximately 40,000 proxy votes were cast in the 2019 general election, representing less than 0.1% of total turnout, with low reported incidence of invalidation due to scrutiny, though critics note potential for undue influence in close races.^[79]^[80]^[81] India's Representation of the People Act, 1951, authorizes limited proxy voting under Section 62 for specific categories, including voters with physical infirmities such as blindness or those on election duty, where a designated proxy may mark and deposit the ballot at the polling station. This provision, intended to enhance accessibility without broadly delegating electoral power, excludes non-resident Indians despite proposals for expansion, as amendments to enable proxy for overseas voters have not been enacted. In practice, proxy usage remains minimal, with fewer than 1% of votes in recent national elections attributed to this method, amid ongoing debates over verification rigor to counter potential coercion in rural areas.^[82]^[83]^[84] France permits proxy voting (vote par procuration) in legislative and other elections, allowing delegation to another registered voter within the same constituency, subject to notarized or consular authentication and limits of one proxy per delegator. Reforms in the early 2000s, including digital application processes, aimed to curb abuses by tightening identity checks and prohibiting multiple proxies, yet studies indicate higher uptake among higher socioeconomic groups, contributing to turnout disparities. In the 2022 legislative elections, over 1.5 million proxy votes were recorded, boosting participation by an estimated 2-3% in affected areas, though verification challenges persist in expatriate communities.^[85]^[86] In Guyana, proxy voting is explicitly facilitated by the Elections Commission for voters physically unable to reach polling stations, with applications processed in advance for general and regional elections; for the 2025 polls, nearly 4,000 applications were received, enabling broader access but raising verification concerns in a system prone to logistical strains. Empirical data from such implementations, contrasted with fraud allegations in less regulated contexts like Iraq's 2010 parliamentary elections—where widespread irregularities including unauthorized ballot handling undermined results despite official denials of systemic abuse—highlight proxy's potential for increased turnout (up to 5% in proxy-heavy districts) alongside persistent risks of manipulation absent robust auditing.^[87]^[88]^[89]^[90]

Advantages and Empirical Benefits

Enhanced Participation and Efficiency

Proxy voting markedly boosts participation in governance bodies with large or geographically dispersed electorates, where in-person attendance is logistically challenging. In U.S. corporations, physical shareholder meeting attendance remains minimal, averaging around 151 participants for S&P 100 companies in 2023, representing a tiny fraction of total ownership.^[91] In contrast, proxy voting yields high engagement, with 87% of processed shares voted on average in the 2024 proxy season according to Broadridge data.^[92] Similarly, in the U.S. House of Representatives, proxy voting implemented from May 2020 through 2023 drove record participation levels, reducing missed votes relative to prior in-person-only eras; abstention rates post-proxy expiration in 2024 rose notably, underscoring the mechanism's role in sustaining legislator involvement during periods of constraint.^[93] Beyond turnout, proxy voting enhances operational efficiency by minimizing logistical burdens and accelerating resolutions. It obviates the costs of physical convenings—such as travel, venue, and coordination expenses—for vast electorates, allowing vote aggregation through streamlined digital or mailed proxies that Broadridge processing handles at scale with 86-87% efficiency in share coverage.^[92]^[94] This causal scaling supports governance in nonprofits and associations with remote members, where proxy-enabled decisions proceed without quorum failures from low attendance, empirically linking to faster policy implementations as seen in sustained House productivity amid 2020 disruptions.^[95]

Evidence from Corporate and Legislative Outcomes

In corporate governance, proxy voting has been associated with enhanced shareholder alignment and firm performance through empirical analyses of voting patterns and outcomes. Research indicates a positive correlation between active proxy voting emphasizing strong governance standards and superior stock returns, as firms with robust proxy engagement demonstrate better long-term value preservation and growth metrics compared to peers with lower participation.^[96] Longitudinal trends from Broadridge's ProxyPulse reports, spanning five proxy seasons through 2024, reveal sustained high approval rates for director elections (averaging 91%) and governance proposals, reflecting informed proxy mechanisms that prioritize performance-driven decisions and contribute to economic stability in adopting firms without introducing undue volatility.^[97]^[98] These patterns extend to causal inferences from proxy contests and engagement, where strategic proxy voting has been shown to increase decision efficiency and align management incentives with shareholder interests, fostering measurable improvements in operational metrics over time.^[99] In legislative contexts, proxy voting implementations during disruptions like the COVID-19 pandemic provided evidence of operational continuity without altering substantive outcomes. In the U.S. House of Representatives, empirical examination of proxy voting from 2020 onward found it positively correlated with members' legislative tenure, enabling seasoned participants to maintain influence on bill progression remotely and avert delays in quorum-dependent processes, while preserving majority vote distributions.^[53] Similarly, the United Kingdom's expansion of proxy voting in 2020 for health-related absences and parental duties facilitated the passage of legislation at standard paces, with voting patterns mirroring pre-proxy majorities and avoiding procedural gridlock that physical attendance requirements might have imposed.^[100] These adaptations underscore proxy voting's role in expediting deliberations tied to efficiency metrics, such as reduced session interruptions, rather than shifting policy equilibria.^[101]

Criticisms and Risks

Potential for Fraud and Abuse

Proxy voting is vulnerable to forgery, where fraudulent documents are created to falsely authorize a proxy, and coercion, whereby delegators are pressured to designate compliant proxies or specific voting instructions. These mechanisms exploit the separation between the delegator and the ballot, complicating real-time verification of intent compared to in-person voting. Chain voting, involving the sequential exchange of pre-marked ballots through intermediaries, can also intersect with proxy systems if proxies facilitate ballot handling or multiple delegations in lax oversight environments.^[102]^[26] Abuse often manifests as proxies voting contrary to instructions or for external incentives, such as payments, particularly in legislative or electoral contexts with limited auditing. In low-oversight settings, this enables organized vote aggregation, where individuals collect numerous proxies to amplify influence or sell voting power. Academic analyses of global proxy systems underscore elevated risks in delegation-heavy frameworks, as unverifiable instructions undermine accountability and invite manipulation absent robust safeguards like witness attestations or proxy limits.^[26]^[103] Empirical instances, though prosecuted at low volumes due to deterrents, illustrate these dynamics; for example, UK cases have involved deception in proxy assignments, prompting enhanced scrutiny. Similarly, the 2020 U.S. House proxy voting expansion amid COVID-19 drew criticism for unverified delegations, with audits revealing no systemic fraud but highlighting procedural gaps that eroded public trust in vote authenticity. While verification protocols—such as identity checks and single-proxy caps—curb incidence, the inherent reliance on third-party fidelity sustains potential for erosion in electoral integrity over direct participation.^[104]^[105]^[106]

Undermining Deliberative Processes

Proxy voting can undermine deliberative processes by enabling principals to delegate votes to agents who lack the immediate contextual awareness and incentives for dynamic engagement, often resulting in the substitution of pre-committed positions for adaptive debate. In the U.S. House of Representatives, proxy voting—authorized under House Resolution 965 from May 2020 amid the COVID-19 pandemic—allowed absent members to designate proxies for floor votes, which critics argued diluted the chamber's deliberative essence by minimizing face-to-face interaction essential for persuasion and amendment negotiation.^[107] This arrangement contradicted the Framers' vision of a body requiring physical assembly for debate, as physical absence precluded participation in evolving floor discussions that could alter voting stances in real time.^[8] Empirical analysis of the 117th Congress (2021–2022) reveals proxy use correlated with patterns of legislative shirking, where representatives with histories of vote avoidance in prior sessions increased proxy reliance by 6.9–7.3% per percentage-point rise in past skipping, suggesting reduced accountability to deliberative norms rather than enhanced participation.^[53] Amendment processes suffered indirectly, as proxy-heavy proceedings limited spontaneous negotiation and real-time adjustments, core to refining legislation through interpersonal exchange; for instance, high proxy rates on major bills like the Build Back Better Act (over 56% in some tallies) constrained the iterative persuasion that in-person quorum facilitates.^[107] While proxy mechanisms offered efficiency during health crises by sustaining quorum without full attendance, evidence indicates they fostered rubber-stamping, with poorer policy refinement outcomes compared to traditional in-person deliberation.^[53] In corporate governance, proxy voting similarly erodes meeting deliberation, as institutional investors and retail shareholders often submit proxies in advance, leading to annual general meetings (AGMs) dominated by management presentations with scant interactive debate.^[108] Over 90% of shares in U.S. public companies are typically voted by proxy, minimizing attendee diversity and the potential for on-site persuasion or amendment to proposals, which prioritizes efficiency but at the cost of robust stakeholder exchange.^[108] This delegation dynamic, where agents (e.g., fund managers) vote without principals' live input, skips the deliberative benefits of collective reasoning, yielding decisions less responsive to emergent arguments and more prone to entrenchment of initial positions.^[5] Although it broadens nominal participation, the absence of real-time engagement correlates with shallower governance outcomes, underscoring a trade-off where procedural speed supplants substantive depth.^[108]

Controversies in Modern Usage

Activist Exploitation in Corporate Governance

Activist investors increasingly utilize proxy voting mechanisms to challenge incumbent boards and advance agendas that may prioritize non-financial objectives over shareholder returns. In proxy contests, activists solicit votes from dispersed shareholders to elect dissident directors or approve proposals, often exploiting proxy advisory firms and retail investor participation to amplify influence despite holding minority stakes. For instance, in the 2023-2024 Walt Disney Company proxy battle, Trian Fund Management, led by Nelson Peltz, waged a high-stakes campaign seeking two board seats to critique management strategy and push for operational reforms; the effort, costing over $600 million in combined expenditures, ultimately failed as shareholders re-elected the full board in April 2024.^[61]^[109] Proponents argue such fights enhance accountability by pressuring underperforming executives to align with owner interests.^[110] However, these campaigns frequently enable the pursuit of ideological priorities, such as environmental, social, and governance (ESG) mandates, which can dilute focus on profit maximization and correlate with inferior financial outcomes. Empirical analyses indicate a weak or absent link between high ESG ratings and superior returns, with evidence of modest underperformance for ESG-heavy portfolios; for example, sustainable funds underperformed traditional peers in the second half of 2024, marking the first such shortfall since early 2022.^[111]^[112] Critics, including corporate leaders, contend that activists exploit proxy access to embed politicized goals—such as climate activism or diversity quotas—that impose costs without commensurate value creation, as seen in efforts to reform SEC Rule 14a-8 to curb "proposal abuse" prioritizing social agendas over returns.^[113] In the 2025 U.S. proxy season, environmental and social proposals saw submission volumes plateau or rise modestly, with support levels increasing 16% for environmental and 24% for social/political items, heightening risks of board distractions from core economic drivers.^[114] This exploitation manifests in board takeovers or policy shifts that redirect resources toward non-core issues, potentially eroding long-term shareholder value amid heightened activism; proxy contests rose slightly year-over-year, with 13 completed fights by Q1 2025 compared to 10 in the prior year.^[115] While activists claim to unlock value through governance tweaks, data on ESG-influenced firms reveal no reliable alpha generation and occasional underperformance relative to benchmarks, underscoring how proxy-driven ideological campaigns can prioritize extraneous goals at the expense of financial prudence.^[116]^[117] Such dynamics highlight tensions between proxy-enabled oversight and the fiduciary duty to maximize returns, with recent corporate defenses—like Exxon's 2025 platform adjustments to amplify retail voices—aiming to counter activist overreach.^[118]

Proxy Advisors' Influence and Bias

Proxy advisory firms, primarily Institutional Shareholder Services (ISS) and Glass Lewis, dominate the market, controlling approximately 97% of proxy advice services provided to institutional investors.^[119] ^[120] Their recommendations significantly shape voting outcomes, with institutional investors aligning their votes with ISS advice in patterns that can differ substantially from independent analysis; for instance, opposition from ISS correlates with a 51 percentage point drop in institutional support for proposals compared to minimal differences among retail investors.^[121] This influence stems from the firms' role in processing and recommending votes for vast shareholdings, often leading to "robovoting" where asset managers delegate decisions without deep review, concentrating authority in few hands and potentially eroding the dispersed decision-making inherent to shareholder democracy.^[122] Controversies over bias have intensified scrutiny of these firms' methodologies. In October 2025, Glass Lewis announced it would discontinue its standard benchmark voting guidelines starting in 2027, transitioning to client-customized frameworks amid regulatory and investor pressure questioning the uniformity and ideological tilts in prior policies.^[123] Critics argue such benchmarks have historically promoted non-financial priorities, with empirical analyses showing recommendations that prioritize governance uniformity over firm-specific economic impacts.^[5] Academic research underscores how this sway can conflict with fiduciary obligations. A 2023 analysis highlighted that proxy advisors' standardized models often override asset managers' duty to prioritize client economic returns, as investors frequently follow recommendations without verifying alignment with portfolio-specific interests.^[5] ^[124] Further, concentrated market power enables opaque practices, including undisclosed conflicts where advisors derive revenue from consulting services to the same companies they critique, leading to votes that deviate from maximizing shareholder value.^[125] ^[122] Defenders maintain that proxy advisors provide essential expertise in evaluating complex governance issues, enabling informed delegation for time-constrained investors.^[126] However, persistent criticisms focus on empirical evidence of recommendations yielding suboptimal economic outcomes, such as opposition to repricings or restructurings justified more by policy templates than value creation data.^[127] ^[128] This tension reveals a structural vulnerability: while intended as aids, the firms' outsized role risks supplanting shareholders' direct accountability with unaccountable intermediaries.^[27]

Recent Developments

Adaptations During Crises (2020 Onward)

In response to the COVID-19 pandemic, the U.S. House of Representatives adopted H. Res. 965 on May 15, 2020, authorizing members to vote remotely by proxy for the duration of the public health emergency declared by the President.^[38]^[129] Under the rule, absent members could designate another representative to cast their votes via a signed form, enabling legislative business to continue amid quarantines and travel restrictions, with proxies used on thousands of roll calls through 2022.^[130] The measure faced Republican opposition, including legal challenges asserting it violated constitutional quorum requirements for physical presence, though federal courts dismissed suits like McCarthy v. Pelosi in 2021, upholding the House's rulemaking authority.^[131]^[132] The proxy system was extended periodically until Republicans assumed House control in January 2023 and declined renewal, reverting to in-person quorum rules effective with the 118th Congress.^[93] Post-termination data indicated a shift from record-high effective participation rates—where proxies ensured near-full representation during peak pandemic sessions—to increased missed votes, with absenteeism rising as members resumed travel-heavy schedules without remote options.^[93] Critics, including Republican leaders, argued the practice enabled potential abuse, such as members designating proxies without genuine health impediments, potentially diminishing deliberative debate and accountability, though empirical analyses found it facilitated sustained productivity without altering legislative outcomes significantly.^[133]^[53] Similar adaptations emerged in European parliaments, where the European Parliament implemented temporary remote voting protocols in March 2020, allowing members unable to attend physically—due to COVID-19 restrictions—to participate via secure electronic means, with proxies or designated voting for plenary sessions extended through 2022.^[134] National legislatures, such as France's Senate, expanded pre-existing proxy systems to accommodate hybrid proceedings, enabling a minimum quorum of ten senators to conduct full votes on behalf of absent colleagues during lockdowns.^[135] These measures maintained operational continuity across EU bodies, with hybrid formats boosting attendance flexibility but prompting post-crisis reviews on reverting to in-person norms to preserve direct engagement.^[136] Overall, crisis-era proxy expansions demonstrably supported legislative functionality amid health constraints, yielding short-term gains in representative turnout—evidenced by U.S. House participation exceeding 99% in proxy-enabled votes versus historical averages below 95%—yet fueled debates on long-term viability due to risks of diluted quorum integrity and observed declines in public confidence in congressional processes, where trust metrics hovered at historic lows of around 20% by 2023 per Gallup and Pew surveys.^[93]^[137] Empirical scrutiny, including Republican-led probes into proxy usage patterns, questioned permanence by highlighting inconsistencies in claimed absences, contributing to broader erosion in institutional trust as reflected in post-2020 polling trends.^[138]^[53]

Corporate Trends in ESG and Anti-ESG Proposals (2023-2025)

In the 2023-2025 period, environmental, social, and governance (ESG) shareholder proposals in U.S. proxy seasons experienced a marked decline in both volume and investor support, reflecting growing skepticism toward their alignment with shareholder value. During the 2025 proxy season, the number of ESG-related proposals filed decreased significantly, with environment-focused resolutions dropping from 250 in the prior year to 169 across 114 companies, while overall shareholder proposals fell by approximately 15% season-over-season. Average support for environmental and social (E&S) resolutions reached record lows, continuing a downward trend from 2023 highs amid prescriptive demands that often prioritized non-financial goals over operational efficiency. This shift was attributed to institutional investors recalibrating priorities toward governance issues, with E&S proposals receiving median support below 5% in many cases.^[139]^[140]^[141] Concurrently, anti-ESG proposals surged, doubling in certain categories like anti-diversity, equity, and inclusion (DEI) measures from 6 in 2023 to 13 in 2024, with further increases projected and observed in 2025, including 131 submissions representing a 17% rise from the previous year. These proposals, often targeting perceived discriminatory practices or mandates conflicting with merit-based operations, garnered limited support—averaging just 1.9%—yet highlighted a backlash driven by evidence of agency costs in proxy voting for social objectives, where managers and advisors pursue ideological aims at the expense of financial returns. Empirical analyses indicate that such proxy-driven ESG initiatives can elevate proactive agency costs by diverting resources from core value creation, as institutional voting power amplifies non-pecuniary influences without commensurate performance gains.^[142]^[143]^[144] Regulatory developments reinforced this trend, with the U.S. Securities and Exchange Commission (SEC) facilitating a 35% increase in corporate no-action requests to exclude repetitive or immaterial proposals during the 2025 season, effectively curbing resubmissions of prior ESG filings that failed to demonstrate substantial economic relevance. This guidance, building on 2024 rescissions of expansive interpretations, reduced the ballot presence of low-support ESG items and allowed firms to prioritize proposals tied to verifiable financial metrics. Emerging alternatives, such as those addressing AI governance and cybersecurity risks, gained traction as proxies for pragmatic risk management over broad social mandates. Studies linking lower ESG proposal support to superior firm outcomes underscore causal realism: resistance to prescriptive ESG voting correlates with enhanced operational metrics like return on assets, as forced social alignments introduce inefficiencies without proven long-term value accretion.^[145]^[146]^[147]

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Jun 1, 2022 · The House passed a temporary resolution in May 2020 allowing for proxy voting and virtual committee work, citing the public health emergency.
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Proxy voting takes on new meaning for Republicans | Brookings
Jan 20, 2022 · Out of all Republican members of the House, 144 of 213 have designated a proxy to cast their vote at least once in the 117th Congress through ...
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[PDF] A Path Toward Shareholder Democracy and Stakeholder Engagement
Even though the modern proxy voting system has negatively impacted particular aspects of the annual meeting, one cannot ig- nore its benefits and added ...
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Disney board meeting: Nelson Peltz loses proxy fight - CNBC
Apr 3, 2024 · Trian Capital has waged a proxy fight against Disney to land two board seats. Disney shareholders rejected the effort.Missing: corporate | Show results with:corporate
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ESG investment performance and global attention to sustainability
The findings suggest a weak relationship between the ESG ratings and expected returns, with some evidence of modest underperformance of high ESG stocks.
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Sustainable Investment Funds Performance: H2 2024
Sustainable funds underperformed traditional funds in the second half of 2024 for the first time since the first half of 2022.Missing: empirical PRI
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Proxy Power and Proposal Abuse: Reforming Rule 14a-8 to Protect ...
Sep 16, 2025 · Proxy Power and Proposal Abuse: Reforming Rule 14a-8 to Protect Shareholder Value ... exploited by activists pushing social agendas at the ...
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[PDF] 2025 Proxy Season Review—Part 1 - Sullivan & Cromwell LLP
Aug 11, 2025 · The percentage of successful requests increased by 24% for social/political proposals and 16% for environmental proposals, but decreased by 11% ...
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Activism Preparedness: Navigating 2025 | Practical Law The Journal
Jul 1, 2025 · Proxy fights were up slightly year-over-year, with 13 finished fights at the end of the first quarter of 2025 versus ten at the end of the first ...<|separator|>
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[PDF] Investor attention to ESG and the underperformance of ... - EconStor
We can observe that high-ESG stocks begin to underperform compared to low-ESG stocks with the onset of the Global Financial Crisis, and this underperformance.
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Dec 10, 2024 · Our empirical analyses show that the Static. ESG Allocation Effect leads to long-term underperformance of sustainable stocks, consistent with ...
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SEC allows Exxon plan to limit shareholder activism - Financial Times
Sep 15, 2025 · Activist groups often exploit this gap to push political goals at the expense of shareholder ... voting platform could dilute activist ...
[119]
Wagner: Our Capital Markets Work Best When Participants Are ...
Apr 29, 2025 · "Two firms—ISS and Glass Lewis—control 97 percent of the proxy advisory market. That concentration alone would warrant scrutiny. "But more ...
[120]
Attorney General Bailey Leads Fight Against Hidden ESG And DEI ...
Jul 11, 2025 · Glass Lewis and ISS control more than 97 percent of the U.S. proxy advisory market, effectively creating a duopoly.
[121]
Testimony in House Hearing: “Exposing the Proxy Advisory Cartel
May 5, 2025 · In the 2021 proxy season, the ACCF found 50 examples of supplemental filings to correct the record regarding inaccurate voting recommendations ...
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Proxy Advisors And Market Power: A Review of Institutional Investor ...
May 27, 2021 · They have been criticized for lacking transparency when developing and issuing vote recommendations, suffering from conflicts of interest that ...
[123]
Under pressure, proxy adviser Glass Lewis to end benchmark ...
Oct 14, 2025 · Major proxy adviser Glass Lewis will no longer offer its "benchmark" voting recommendations starting in 2027 and instead will offer a set of ...
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[PDF] House Committee on Financial Services August 1, 2024
Aug 1, 2024 · advisers are genuinely fulfilling their fiduciary duties when relying on proxy advisory firms' recommendations. One particular concern ...<|separator|>
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[PDF] The Troubling Case of Proxy Advisors: - SEC.gov
Proxy advisors' issues include lack of transparency, inaccurate analysis, conflicts of interest, and boards being overly preoccupied with their recommendations.
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Testimony at the Committee on Financial Services hearing
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Proxy advisory firms and stock option repricing - ScienceDirect.com
Proxy advisory firms claim that their voting policies are based on research and are free from conflicts of interest. For example, the stated mission of ISS ...Missing: criticisms | Show results with:criticisms<|separator|>
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Proxy Advisors Remain a Problem: 2024 Report | ACCF
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House Democrats Approve Remote Voting, Hearings During ... - NPR
May 15, 2020 · The Democratic-led House approved rule changes that will allow members to vote by proxy and hold hearings remotely during the coronavirus pandemic.<|separator|>
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Proxy Voting and the Constitution - Legislative Procedure
May 28, 2020 · Proxy Voting In A Pandemic ... In response to the COVID-19 pandemic, the House has adopted new rules to end its decades-long ban on proxy voting.
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Dozens in Congress still vote remotely as critics slam COVID policy
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Temporary measures enabled remote voting or attendance for Members unable to be physically present, thereby incidentally benefiting those on maternity leave.
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Apr 7, 2020 · However, the French Senate can use an extensive proxy voting system in which a full vote can be held with only ten senators present. Under this ...Missing: 19 | Show results with:19
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Jun 24, 2024 · As of May 2024, 22% of Americans say they trust the government in Washington to do what is right “just about always” (2%) or “most of the time” (21%).
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End Proxy Voting in the House of Representatives. Now.
May 21, 2021 · Meeting with constituents, speaking with staff about legislation, scurrying from one committee hearing to another: These are all activities ...
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Shareholder-rights resolutions surge in 2025 proxy season | News
Sep 2, 2025 · The 2025 proxy season saw a notable decline in environment-related proposals, with 169 filings across 114 companies, down from 250 proposals at ...
[140]
Proxy Season Early Review - Society for Corporate Governance
Jul 7, 2025 · Reduced number of shareholder proposals—The number of shareholder proposals declined 15% season-over-season consisting of a 20% reduction in ...
[141]
In Focus: Shareholder Proposals in the 2025 U.S. Proxy Season | ISS
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New Policy Landscape Turbocharges DEI & ESG Activism in 2025 ...
Feb 25, 2025 · 2024 proxy season recap: Anti-DEI proposals more than doubled in the last year, from 6 in 2023 to 13 in 2024. · 2025 proxy season outlook: ...
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Shareholder Proposals | ESG Litigation & Enforcement Tracking
Nevertheless, 131 anti-ESG proposals have been submitted by shareholders in the 2025 proxy season, an increase of 17% from 2024. Over two-thirds of these anti- ...
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Anti-ESG Proposals Fail to Gain Mainstream Investor Proxy Support
Oct 10, 2025 · Political anti-ESG noise is not translating into proxy voting power, with proposals averaging only 1.9% support from shareholders. → ESG.
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Shareholder Proposal No-Action Requests in the 2025 Proxy Season
Sep 25, 2025 · Corporations submitted 35% more no-action requests to the SEC this proxy season to exclude shareholder proposals from their proxy statements ...
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Shareholder Proposal No-Action Requests in the 2025 Proxy Season
Oct 7, 2025 · Corporations submitted approximately 35% more no-action requests to the SEC this proxy season to exclude shareholder proposals from their proxy ...
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[PDF] How the SEC Can Help Mitigate the "Proactive" Agency Costs of ...
Part IV describes the ever-increasing voting power of mutual fund advisers, how it may lead to proactive agency costs of agency capitalism, and what the SEC can ...