Introduction

Shareholder voting is optional for institutional managers (IMs), a category that includes activists, hedge funds, private wealth, and mixed asset management. Only 44% of IMs vote on firms’ say-on-pay (SOP) policies (p.3), yet in 2025, IMs cast votes on $16.4 trillion in shares, more than double the $8 trillion voted by mutual funds (p.3). The paper uses newly available data from SEC Rule 14Ad-1 to examine heterogeneity across IMs in shareholder voting as a monitoring tool.

A model of optional institutional voting

A discrete choice model examines how position size affects the propensity and direction of voting. Larger positions increase the net benefit of voting. An extended model adds friendly voting and engagement, generating a U-shaped relationship: at low position sizes, friendly voting dominates; at mid-range sizes, informed voting increases opposition to management; and at the largest positions, engagement incentives push support back up.

Data and descriptive statistics

The study covers SOP votes across 7,021 annual firm meetings from 2023 to 2025 (p.2), with IMs categorised as activists, hedge funds, private wealth, or mixed asset management. Across nearly 1.5 million institution × firm × year observations, 57% represent IMs (p.18). Average total CEO pay equals $14 million, of which 83% is performance-based (p.18).

Heterogeneity in voting choice, univariate evidence

Across all IMs, 44% exercised their right to vote; 33% have a stated policy not to vote (p.19). Private wealth investors are least likely to vote at 29%, with 64% having a stated policy not to vote (p.19). Activists and hedge funds have the highest voting rates at approximately 75% (p.19), while mixed asset management falls in between at 40% (p.20). Only 16% of mutual funds indiscriminately follow management, compared to 34% of activists, 43% of hedge funds, and 62% of private wealth (p.20).

IMs’ voting strategy

A one standard deviation increase in IM NAV is associated with a 35.1 percentage point higher likelihood of voting (p.22), while a one standard deviation increase in portfolio firms is associated with a 38 percentage point lower likelihood (p.22). The probability of voting increases monotonically from less than 20% in the lowest position size decile to close to 70% in the highest (p.23).

IMs support versus opposition to management

Across nearly 1.5 million SOP votes, average IM voting support is similar to mutual funds (p.25). Large IMs are 10 percentage points more likely than large mutual funds to oppose management (p.5), and where an institution holds an above-median percent of firm equity, IMs are 8 percentage points more likely to oppose management (p.5). Activists are the most pro-management, with support 4.8 percentage points higher than other IMs (p.32), while mixed asset management is most anti-management at 3.6 percentage points lower (p.33).

Heterogeneity across portfolio firms

Smaller firms attract fewer IM votes. Within the smallest firm-size deciles, only about 60% of IM shares are voted, compared to about 68% in deciles seven to nine (p.34). Among shares voted, IMs are more likely to oppose management in smaller firms, consistent with higher agency costs.

Conclusion

IMs differ from mutual funds fundamentally: only 44% vote on any portfolio holdings, versus a required 100% for mutual funds (p.35). Voting rates are lowest among smaller positions and firms, but conditional on voting, IMs are more anti-management on larger positions, suggesting stronger monitoring where financial stakes are greatest.