http://theconversation.com/these-three- ... rica-77072
Combined, Vanguard, Blackrock, and State Street (The Big Three) are the largest shareholder in 90% of the companies in the S&P 500.
They hold their shares for us, the investors.
How large shareholders influence the behavior of management has always been an important issue; management pays attention! Hence the dilemma.
What, in your opinion, is the correct posture for these large investment houses to adopt in influencing management to act in ways that provide the greatest benefit to us as individual investors?
If The Big Three phone it in and just vote for management's recommendations all the time, is that is our best interest?
And don't think it doesn't get tricky! What if it were more beneficial to holders of ALL an industry's stock to kill off one company and grow the others?
Here's an excerpt:
The power of passive investors
With corporate ownership comes shareholder power.
What is undeniable is that the Big Three do exert the voting rights attached to these shares. Therefore, they have to be perceived as de facto owners by corporate executives.
These companies have, in fact, publicly declared that they seek to exert influence. William McNabb, chairman and CEO of Vanguard, said in 2015 that, “In the past, some have mistakenly assumed that our predominantly passive management style suggests a passive attitude with respect to corporate governance. Nothing could be further from the truth.”
Interestingly, though, we found that the Big Three vote for management in about 90% of all votes at annual general meetings, while mostly voting against proposals sponsored by shareholders (such as calls for independent board chairmen).
One interpretation is that BlackRock, Vanguard and State Street are reluctant to exert their power over corporate America. Others question whether the Big Three really want this voting power, as they primarily seek to minimise costs.