Once a year, every public corporation holds a shareholder meeting. Shareholders make critical decisions shaping each company’s governance— decisions such as who will serve on the board of directors, how senior executives will be paid, and what general policies the shareholders will recommend to the company’s board.
The AFL-CIO Key Votes Survey is a record of how investment managers, mutual funds and proxy voting consultants voted the shares they manage on behalf of pension plans on key issues at these meetings during the proxy season. Pension plans generally delegate the authority to vote their shares to their investment managers, mutual funds, or a specialized proxy voting consultant.
The AFL-CIO Key Votes Survey is designed to help pension plan trustees fulfill their fiduciary duty to monitor the proxy voting performance of investment managers, mutual funds, and proxy voting consultants. Good corporate governance matters to shareholders and proxy voting is the most direct means for shareholders to exercise oversight in relation to the corporations they own.
In 2022, the U.S. Department of Labor affirmed the importance of proxy voting by pension plans in a final rule titled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” stating that “[t]he fiduciary duty to manage plan assets that are shares of stock includes the management of shareholder rights appurtenant to those shares, such as the right to vote proxies.” 87 Fed. Reg. 73866 (December 1, 2022).
Because proxies are a plan asset, ensuring that they are voted in the interests of plan participants and beneficiaries is part of a trustee’s fiduciary duty. The AFL-CIO Key Votes Survey is intended to help trustees fulfill this duty by reviewing the voting records of investment managers, mutual funds, and proxy voting consultants.
The proposals included in the AFL-CIO Key Votes Survey are submitted by Taft- Hartley, union, and public employee pension funds as well as employee shareholders and other investors, and are consistent with the AFL-CIO Proxy Voting Guidelines. These proposals represent a worker-owner view of value that emphasizes management accountability and good corporate governance.
A score representing the percentage of votes cast consistently with the AFL-CIO Proxy Voting Guidelines and a corresponding tier group categorization are assigned to each firm to assist trustees in evaluating the relative proxy voting performance of competing investment managers, mutual fund families, and proxy voting consultants.
