A while back, I posted about what was then the new voting choice programs being adopted at large mutual fund complexes, giving retail shareholders the right to choose voting policies that would apply to their pro rata share of fund ownership.

Well, Alon Brav, Tao Li, Dorothy S. Lund, and Zikui Pan have a new paper out, The Proxy Voting Choice Revolution, that dissects the early results for Vanguard’s funds, and what is actually the thing that stands out to me is not what the choices reveal about retail shareholders, but what they reveal about proxy advisors.

The thing is, proxy advisors have a benchmark policy of standard voting recommendations, and they have custom policies that can be tailored to the needs of their individual clients, and they also have “themed” policies which are somewhere in between – “off the rack” so a client doesn’t have to pay for tailoring, but specialized beyond the basic policy.  Except we don’t have a lot of insight into exactly how ballots are cast for these themed policies – until, apparently, now.

The authors are able to use the data from Vanguard to infer how Glass Lewis’s ESG themed voting policy worked in practice.  So, for example, GL’s ESG policy rejected auditor ratification at a very high rate, apparently because the policy frowns on prolonged auditor-client relationships.  More generally, though, the authors find that a number of the ESG-themed votes cannot be explained by the ESG voting policy as described in Glass Lewis’s materials.  (They’re not, I take it, singling out Glass Lewis or ESG themed policies as a particular problem; it’s just, this was where they could spot differences.  They point out, for example, that Egan-Jones has a “wealth focused” voting policy which apparently is defined mainly by opposition to DEI and ESG, which, among other things, may not be what retail investors expect.)

Anyway, this highlights one of the issues that will arise going forward if retail shareholders are expected to choose policies – we’re going to need better explanations of what that exactly they will entail; retail, unlike institutional clients, can’t discuss the matter directly with proxy advisor reps. 

But there’s more! The authors note that though there has been little uptake for Vanguard’s voting choice program so far, of those who do participate, most have chosen the “vote with management always” policy.  I don’t know if that tells us what’s likely to happen as the program expands – the early adopters may differ systematically from those who have to be coaxed into making a selection – but it does perhaps? Provide some insight into another retail voting program, which is, the one recently adopted by Exxon.

As most readers probably know, Exxon recently got SEC approval to allow its retail shareholders – direct holders, not through funds – to choose to adopt standing voting instructions that will have them always vote with management unless they later opt out (of the program entirely, or for a particular shareholder meeting).  Law firms have since been jumping to issue memos to clients recommending that they consider adopting similar programs. One big question mark is whether retail shareholders will have much appetite for the program; the Vanguard data, anyway, suggests there may very well be some.

And another thing.  On this week’s Shareholder Primacy podcast, Mike Levin and I talk about – what else! – the Exxon program, as well as the new proposal to eliminate quarterly earnings reports.  Here at Apple, here at Spotify, and here at YouTube.

Yesterday, the Nevada Supreme Court officially created a Commission to Study the Adjudication of Business Law Cases. I previously covered the Supreme Court’s proposal here and submitted a letter in support of the proposal.

The order creating the Commission contemplates a continuing public process. It provides that the Commission “shall conduct all hearings in public and post all meeting minutes and documents considered by the Commission on the Supreme Court’s website.”

At present, I have not been able to find a page set up specifically for the Commission on the Supreme Court’s website. Of course, much of Nevada’s state government has been struggling in recent weeks because of a large-scale cyber attack on Nevada systems–including the judiciary. The Supreme Court might also simply opt to continue to use the existing administrative docket. Or we could see something show up in the near future.

There are some changes from the Petition. The Petition identified 21 proposed members. The final order expands to 24 members, adding: (1) “Judge” as a Rural Representative; (2) “Attorney” as a Rural Representative; and (3) Virginia Valentine as a representative of the Nevada Resort Association.

Historically, it has been difficult to observe the operation of Nevada’s existing business courts. For example, the courts in Washoe County and the courts in Clark County now use different filing systems.

But we may have more data soon. As part of a larger project, I’ve begun to attempt to pull together data about Nevada courts and business court practice. The current system for Clark County does allow case searches by bar number and that has given me a way to identify how often particular attorneys show up in Clark County cases. Unsurprisingly, my rough statistics show that the Southern Nevada Attorneys with a business litigation practice have substantial experience.

I keep explaining in various spaces so I may as well articulate it here too: It’s tough to make predictions, especially about the future, but I would be surprised if Texas wins the current chartering race, or at least, wins the race it’s currently running.

The issue for Texas is that it keeps demonstrating that it is not interested in crafting a well-designed – even manager-friendly – corporate law; instead, it is interested in using corporate governance as another cudgel in the culture war.

Let’s look, for example, at two recent amendments to its corporate code: allowing corporations to limit shareholder proposals by those who hold either less than $1 million worth of stock or 3% of voting shares; and the proxy advisor law that puts a variety of restrictions on proxy advisor advice.

These laws explicitly take aim at liberal-coded measures; shareholder proposals, for example, have historically been oriented toward liberal causes (despite a recent upsurge in anti-ESG proposals), and the proxy advisor law is targeted at “ESG” advice.

The laws are also a model of poor drafting. The shareholder proposal law, for example, does not apply to corporations chartered in Texas, but does apply to corporations headquartered in Texas or listed on the (currently nonexistent) Texas Stock Exchange. The proxy advisor law, by contrast, applies to corporations chartered in Texas or headquartered in Texas, but not companies listed on the TSE. I don’t know why the inconsistency, and I’m guessing neither does the Texas legislature.

The shareholder proposal law allows corporations to limit proposals by shareholders with less than $1 million in stock or less than 3% of the stock, but does not make clear whether it’s the lesser or the greater of the two. I.e., if you own $1 million but less than 3%, can the corporation bar you from making proposals? I cannot tell. It also allows the company to limit proposals to those who solicit 67% of the shares, but if it’s a 14a-8 proposal included in corporate documents, doesn’t that mean 100% of shareholders are solicited?

The proxy advisor law, of course, defines “ESG” advice as nonfinancial, even though the “G” includes “governance” – and requires proxy advisors to confess publicly to offering nonfinancial advice whenever they make ESG recommendations. That would cover virtually every bit of advice a proxy advisor offers, and label such matters as board independence, overboarding, and related party transactions as per se nonfinancial concerns. The statute takes pains to define the term “proxy proposal,” but then goes on to actually use the term “shareholder-sponsored proposal” and I have no idea if they are the same thing (the reason they may not be is, not all shareholder-sponsored proposals are offered through the Rule 14a-8 process). The final portion of the statute, titled “conflicting voter advice,” appears to attack scenarios where a proxy advisor offers different advice to different clients, but enigmatically includes within its sweep scenarios where the advisor counsels that “one or more clients vote for or against the proposal in opposition to the recommendation of the company’s management,” i.e., simply opposes management – which has nothing to do with conflicting voter advice.

There’s more, but I’m lazy and that’s enough to make the point: No one took these laws seriously as actual regulation of corporate governance; they read more as an expressive attack on wokeness. But that has not dissuaded the Texas Attorney General from – and this just hit the docket today – immediately appealing to the Fifth Circuit to overturn the preliminary injunction that a Texas court issued to block him from enforcing the proxy advisor law. At the same time, he’s chosen to launch an investigation into Glass Lewis’s and ISS’s ESG advice.

Meanwhile, there is one thing we know for a fact corporations want, because they strong-armed the Delaware legislature to get it: the ability to sign expansive shareholder agreements. But those kinds of agreements continue to be somewhere between very difficult and impossible to adopt in Texas, see TX BUS ORG §§ 21.101(b); 21.109, and the Texas legislature apparently preferred to spend its valuable session time outlawing ESG than loosening those restrictions.

The problem with Texas as an incorporation hub, then, is that the signal being sent by the legislature is that it views corporate law solely as a mechanism to police business activity that is insufficiently conservative-coded, and that makes boards vulnerable to retaliation if they fail to toe the line. The danger is especially acute in light of poorly-reasoned decisions like Spence v. American Airlines, 775 F. Supp. 3d 963 (N.D. Tex. 2025), where a Texas (federal) court held American Airlines breached its fiduciary duties under ERISA by including ordinary BlackRock funds in its 401(k) plans, at a time when BlackRock supported nonbinding climate change proposals (discussed with Mike Levin on the Shareholder Primacy podcast, here).

You might be thinking, Texas’s protections against shareholder lawsuits are so robust that there would be little opportunity for a politically-motivated attack to gain traction. But I can see ways that a sympathetic (or unsympathetic, depending on which side of the “v” you sit) court could allow a claim to proceed. For example, Texas bars inspection of books and records in anticipation of litigation, see TX BUS ORG § 21.218; but a claimant might disclaim a litigious purpose. And, that permission Texas corporations have to limit shareholder lawsuits to 3% holders? Only applies in derivative actions, see TX BUS ORG § 21.552, and the direct/derivative distinction is endlessly malleable. Finally, of course, the Texas Attorney General could always sue to dissolve a corporation’s charter.

Delaware famously dismissed a shareholder lawsuit against Disney concerning its opposition to the “Don’t Say Gay” law, but I genuinely can’t be sure a Texas court would do the same – and, more importantly, neither can corporate boards.

And another thing. No new Shareholder Primacy podcast this week, but if you really want to hear me talk even more about Elon Musk’s pay package, and Texas corporate law vs Delaware’s, here’s me on Fordham Law School’s Bite-Sized Business Law podcast, and on Bloomberg’s Odd Lots podcast.

Last week, I posted about the SEC’s proposal to reconsider its stance on arbitration of federal securities claims – today, they went and did what was entirely obvious and greenlighted the inclusion of securities arbitration provisions in charters and bylaws.

As I posted last week, Delaware just banned these in September, more in anticipation of bylaws that select a forum without jurisdiction to hear a dispute than arbitration provisions. Commissioner Atkins’s statement all but called on Delaware to change its law and/or invited other states to compete by offering a more favorable law; I expect we’ll see movement along those lines soon.

(I also imagine there will be a resurgence of arguments that arbitration provisions in corporate constitutive documents are not, in fact, contracts, and their enforceability, especially with respect to federal claims, is not controlled by the chartering state. I of course find that argument persuasive, but a number of courts have already rejected it in the context of forum selection bylaws; let’s see if they start to walk that back).

The thing is, it feels like we’re seeing an attack on public information on a number of fronts. To the attacks on the BLS and NOAA and the CDC to the proposed shift to semi-annual reporting to eliminating investor class actions and shunting any remaining disputes into private arbitration, we seem to be rapidly entering a world where the general public has a lot less insight into the American economy and its general well being. That, of course, makes it easier for insiders to exploit their informational advantages – including by manipulating or slanting what gets publicly released, so as to influence popular perceptions. And of course, when legal compliance cannot be policed by the general public – when it is only policed by federal regulators – that makes it easier for regulators to favor some and disfavor others with their enforcement choices.

This in from Christine Hurt at SMU Law, chair of the AALS Section on Agency, Partnerships, LLCs and Unincorporated Associations.

The AALS Section on Agency, Partnerships, LLCs, and Unincorporated Associations is hosting two programs at the AALS 2026 annual meeting, scheduled for January 6-9 in New Orleans, Louisiana. Both programs have a Call for Papers.

We are excited to be hosting a joint program with the Section on Securities Regulation, “Unincorporated Entities in the New Digital Retail Investing Economy,” on Tuesday, January 6, 2026. We welcome unpublished papers and works-in-progress on any aspect of the use of partnerships, limited partnerships, trusts, and limited liability companies in the investing ecosystem, particularly as that use relates to new digital investment products and expanded participation by retail investors. If you would like to present on this topic, please email your abstract or paper to me, churt@smu.edu, by September 25, 2025. Please put “Digital Retail Investing Economy” in the Subject Line.

The second program we are hosting is a “New Voices in Unincorporated Entities” program. We seek unpublished papers and works-in-progress on any aspect of the governance of unincorporated entities. Presenters who are chosen through the call for papers will have the opportunity to present their work and also to receive comments from an expert in the field. Preference will be given to junior scholars, but all scholars are welcome to attend the program and participate in the discussions. If you would like to present on this topic, please email your abstract or paper to me, churt@smu.edu by September 25, 2025. Please put “New Voices in Unincorporated Entities” in the Subject Line.

Authors of the selected papers will be notified by October 15. Selected presenters will be responsible for paying their registration fee.