Pensions, Proxies, and Power: Recent Developments in the Use of Proxy Voting to Influence Corporate Governance

Several government agencies regulate the conduct of pension funds that attempt to influence corporate behavior through the proxy process. This article focuses on only two aspects of the overall regulatory scheme: Regulation 14A of the Securities Exchange Act regulating the solicitation of proxies, and Section 404(a) of the Employee Retirement Income Security Act (ERISA) governing the duties of pension fiduciaries. The delegation of proxy voting to investment managers under ERISA will be analyzed, and the proxy voting guidelines recently adopted by the AFL-CIO will be reviewed. Proxy reform proposals made by major institutional investors such as CalPERS and the AFL-CIO also will be examined.