The Problem: Two Governments
There are two governments in this country: the Economic (Wall Street) and the Political (D.C.)
Every two years Americans go to the polls to exercise their voice in the political government. Unfortunately, as any astute observer has witnessed, these interests are blunted by the influence of the economic government. Companies and trade organizations use large lobbying budgets to pursue their interests, frequently at the expense of the average voter. In recent years political and ideological interests have been using the economic government to advance non-economic issues using the proxy voting process.
The Republic Capital Management LLC gives you the opportunity to leverage your investments in public companies to give you a voice in the economic government, while at the same time helping you to build wealth for the future. This is done through the proxy voting process.
Many investment firms outsource proxy voting to third-party proxy advisory firms, or refuse to take the responsibility, leaving it to their clients instead, who frequently do not take the time or the understanding to exercise their right to vote. During the 2017 proxy season retail investors only voted approximately 29% of their shares! (Chairman Jay Clayton, Statement Announcing SEC Staff Roundtable on the Proxy Process, July 30, 2018)
These proxy advisory firms are not regulated in the United States. Further, the proxy advisory services industry is effectively a duopoly: Institutional Shareholder Services (ISS), which is owned by a private equity firm called Genstar and Glass, Lewis & Co., a portfolio company of the Ontario Teachers’ Pension Plan Board. These two firms control 97% of the industry, giving them enormous influence over the outcome of shareholder votes. (Manhattan Institute, “Proxy Advisory Firms: Empirical Evidence and the Case for Reform,” May 2018)
Compounding the issue is the growth of institutional investors. With low cost passive index ETFs and mutual funds a growing component of investor portfolios, several asset managers have grown to be large shareholders in almost all publicly traded companies. (It should be noted here that when you invest through ETFs and mutual funds the voting rights of the underlying stocks goes to the investment firm that manages the ETF or mutual fund, not the retail investor.) To give an idea of the magnitude of this consolidation, below is a list of the world’s largest investment management firms by assets under management. This has allowed these investment firms to use your investments to vote how they see fit, diminishing your voice
|2||Vanguard Group||United States||$4,866,611,000,000|
|3||State Street Global||United States||$2,511,297,000,000|
|4||Fidelity Investments||United States||$2,424,697,000,000|
|6||J. P. Morgan Chase||United States||$1,987,000,000,000|
|7||Bank of New York Mellon||United States||$1,722,000,000,000|
|9||Capital Group||United States|
* "The World’s Largest 500 Asset Managers” Towers Watson, As of Dec 31, 2018
The Solution: The Republic Capital Management LLC
In 1950 6.1% of outstanding shares were owned by institutional investors; as of 2016 institutional investors owned around 70% of outstanding shares. (PricewaterhouseCoopers LLP, “The Changing Face of Shareholder Activism,” February 2018) With the consolidation of voting power over publicly traded companies by a few investment management firms; entities and individuals with political motivations have begun to take advantage.
Here at The Republic Capital Management we handle the proxy voting process and vote on your behalf; not a third-party proxy advisor. Allowing us to ensure your values and your investments are aligned. All clients who elect to have The Republic Capital Management LLC vote shares on their behalf receives an ownership report on who their shares were voted.
Publicly traded companies have a section on their corporate website called “Investor Relations”, it is in this section you can locate the firms most recent proxy statement along with annual reports and quarterly earnings. Additionally the information can be located on the SEC (Securities and Exchange Commission) website. Publicly traded companies are required to file forms with the SEC during the course of business. The following link brings you to the sec website. Search for the company then search for “DEF 14A” which is the filing code for annual proxy statements.