If the Financial Choice Act had been law — which it still is not, for now — it would have required any shareholder seeking to
change a company’s policies to own far more shares than even a big institutional investor like New York City’s pension funds.
Because the pay recovery from Mr. Stumpf and Ms. Tolstedt was largely the work of a single Wells Fargo institutional investor
— specifically, New York City’s pension funds, which are now overseen by the city comptroller, Scott M. Stringer.
The 1 percent threshold for shareholder proposals in the Financial Choice Act implies
that ideas submitted by smaller shareholders are less effective or successful, Mr. Soltes said in an email.
“None of those proposals ever got more than about 20 percent of the vote,” Mr. Hitchcock said, “but the ability of small shareholders to raise the issue forced companies to look at what they were doing
and to answer to their shareholders, as well as the general public.”
A new academic study confirms Mr. Hitchcock’s appreciation for the role that small shareholders can play in shaping corporate behavior.
After the bank had paid $185 million to settle investigations into the phony account-opening mess, the current comptroller,
Mr. Stringer, wrote to the Wells Fargo board, urging it to recover pay from Mr. Stumpf and Ms. Tolstedt.
But “the idea that bigger shareholders create ‘better’ proposals is not supported by empirical data.”
It concluded that “managers often seek to avoid the implementation of legitimate shareholder interests” and
that larger companies with worse performance and fewer institutional investors are more likely to contest shareholder proposals
