The Parallel Universes of Institutional Investing and Institutional Voting

Over the past 30 years, institutional investing and institutional voting of portfolio shares have separated to the point that in most institutions the persons charged with making investment decisions have relatively little or no responsibility for voting the institution’s portfolio shares. While this is not universally the case, it is by far the prevailing paradigm. It has become rare for those charged with making investment decisions to buy or sell stock also to be important players in the share voting process. The reasons for the divorce of investing and voting at institutional investors are: The law of large numbers (too many portfolio companies with too many ballot votes at annual shareholder meetings), and
Two seminal decisions by government agencies that regulate our institutional investor community — the US Securities and Exchange Commission (SEC) and the US Department of Labor in its administration of ERISA.