Why voting matters for index investors
The ‘one share, one vote’ standard has been in place since 1940 but the number of companies with unequal voting rights is on the rise.
Voting ensures shareholders’ interests are protected on issues from poor performance to executive pay to climate change.
Voting is a powerful tool. It forms the central mechanism by which shareholders exercise their ownership rights and without it, the ability to hold management to account is compromised. Voting ensures shareholders’ interests are protected on issues from poor performance to executive pay to climate change.
The ‘one share, one vote’ standard, adopted by the New York Stock Exchange in 1940, rests on the principle that control of the company should be proportional to the commitment of capital. Alternative corporate structures have been tried in the past, including ‘one investor, one vote’ where every investor has an equal vote regardless of the holding size, but ‘one share, one vote’ has generally dominated investment thinking and corporate voting structures.
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