Strive's Approach to Proxy Voting
Strive’s proxy voting process stands apart from the industry standard, which is often automated or rules based. Instead, we take a decidedly manual approach to all proxy voting and analysis, employing our team to hand review each proposal with a human eye.
While this certainly is the path of most resistance, votes that rely on third parties or summary data would simply miss the mark. Many asset managers use a formulaic approach that focuses on metrics—such as the number of board positions a director holds (“overboarding”) or executive pay-equity analysis (that is, calculating executive pay as a percentage relative to average employee pay)—or vote “yes” on any proposal made by management, regardless of whether or not it is likely to increase shareholder value.
Other asset managers commit to blindly following the recommendations of third parties that are uninterested in maximizing financial value (a practice sometimes called “robovoting”) or use blanket policies to vote “yes” on all climate proposals or governance proposals or whatever the case may be.
These formulaic methodologies ignore the nuanced differences between companies and proposals, leaving shareholders without a true advocate acting in their best financial interests.
Strive, by contrast, views each proposal on a case-by-case basis, evaluating it with the exclusive aim of determining whether we believe the proposal is likely to increase long-term shareholder value.
Generally speaking, the factors we consider include:
One factor we consider is whether the proposal was submitted by shareholders or company management. Because management has a legal obligation to act in the best financial interest of shareholders, we are generally more likely to vote in favor of management-submitted proposals—unless there is evidence that management or the board has been captured or unduly influenced by proponents of stakeholder capitalism, including other large asset managers.
Another factor that we weigh heavily is the stated and apparent purpose of the proposal. Often, ESG proponents will not even attempt to argue that their proposal is aimed at increasing long-term financial value; rather, they admit that the proposal is explicitly aimed towards forcing the company to adopt and reach political or social goals. In such cases, Strive will vote against the proposal unless there is demonstrable evidence that, despite the stated aim of the proposal, it is likely to increase long-term financial value to shareholders.
If an ESG proposal claims that, if adopted, it will increase long-term financial value for shareholders, we will review the submission to determine whether the proponent has offered any evidence-based return on investment analysis to support such a claim. If they have not done so, we are unlikely to vote in favor of a proposal that on its face appears to have a “mixed motive”—that is, if it claims to pursue both ESG and financial goals, absent compelling reasons to believe the proposal is likely to generate long-term financial returns.
Generally speaking, Strive also factors in any research that the proponent cites in support of the proposal, as well as any research or white papers that Strive has independently produced on the topic. Throughout the year, Strive’s research team studies common ESG-related topics and examines shareholder proposals in depth to determine whether or not they would likely lead to greater financial returns for shareholders. The governance team incorporates this research into their voting analyses to make informed judgments on how to vote to maximize financial return.
While Strive takes an individualized approach to each ballot it casts, many of this year’s proposals hit on similar themes, and, unsurprisingly, Strive often approached them the same way. We have therefore organized the remainder of this report by topic—executive compensation proposals, environmental proposals, social proposals, governance proposals, and director nominations—to provide our clients with greater insight into our voting philosophy.
