One topic missing from the early analysis of the SEC’s proxy access rulemaking [1] has been mutual funds as issuers. Though, a few experts have recognized the importance of mutual funds as shareholders. For example, Ira Millstein and Stephen Davis welcomed proxy access and noted that it “places a colossal bet that shareholders will patrol the market. Up to now many, including major mutual funds, have simply voted shares on autopilot.” [2]

Indeed, given that they hold 24% of US corporate equity, [3] the sway of mutual funds as shareholders is significant. This voting power might be tapped to reach the threshold to nominate corporate directors. And, this voting power will be used to support or block shareholder director nominees and shareholder proposals related to director nominations and elections. Notwithstanding this capacity, activists should not expect much from the largest mainstream fund families who historically favor management when casting proxy votes on shareholder-sponsored corporate governance proposals. [4]

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