No One Crowned BlackRock and Vanguard to Rule Over Companies

Investors in Elon Musk’s Tesla Inc. voted this month to give the billionaire a $1 trillion compensation package, over the objections of some large institutional shareholders. Having a say on big management decisions is one of the benefits of owning shares of a company. If you buy stock in a public company, you generally get a vote, unless the shares explicitly exclude it.

But what if, rather than buying Tesla stock directly, you invest in a stock fund that buys Tesla on your behalf along with shares of various other public companies. Who should have the right to vote, you or the fund? The way it works now is that the fund almost always gets the vote, and frequently that fund is run either by BlackRock Inc. or the Vanguard Group. But that’s the wrong answer.