Proxy Voting via the Wealth-Focused Policy

What is the Wealth-Focused Policy?

As one of five off-the-shelf policies, the Egan-Jones Wealth-Focused Policy is a unique offering in the market that prioritizes shareholder wealth over market-standard environmental, social, and governance (ESG) compliance. Unlike conventional ESG frameworks that impose uniform governance and sustainability standards, this policy’s guiding philosophy is to allow management the freedom to manage, while holding directors accountable for poor returns to shareholders.

Guiding Principles

Our policies at Egan-Jones are designed to fit the unique and diverse perspectives of our clients. The Wealth-Focused Policy is grounded in the following core principles:

1. Director Accountability: Directors should hold executives accountable for company performance. This occurs primarily through decisions on executive compensation, executive appointments, and approval of strategic direction.
2. Shareholder Oversight: Shareholders should hold directors accountable for company performance, primarily through director elections.‍
3. Balanced Shareholder Rights: Shareholders should retain meaningful rights—such as the ability to call special meetings, act by written consent, and submit shareholder proposals—while minimizing unnecessary disruption to management. However, the Policy does not support forcing structural overhauls such as eliminating staggered boards or dual-class share structures.‍
4. Flexibility Over Uniformity: One-size-fits-all corporate governance models are not supported. The Policy does not enforce diversity or independence quotas, tenure or age limits, or mandatory separation of the Chair and CEO roles.‍
5. Management Discretion with Accountability: Management should retain flexibility over capitalization, human capital, governance, and compensation decisions. If poor choices lead to below-average returns, directors and executives should be held accountable.
   

Why Not Emphasize ESG?

ESG investing has gained traction globally, with significant capital flows into “sustainable” funds (especially in Europe) and growing pressure for companies to adopt ESG-oriented governance. However, despite its popularity, research indicates no consistent link between ESG adoption and superior long-term shareholder returns.

A 2020 meta-study of over 1,000 peer-reviewed papers found no statistical difference in financial performance between ESG and conventional investment strategies.

Why Doesn’t ESG Correlate with Performance?

On the surface, ESG principles appear aligned with sound management—treating employees fairly, ensuring independent oversight, and securing long-term sustainability. However, these are already considerations for any company seeking to prosper.

For instance, a company that mistreats its employees will naturally face high turnover and reputational risk, regardless of whether it follows a formal ESG framework.

Further, many “best practice” governance practices have changed over time and face criticism. For example, staggered director elections, also known as classified elections, became popular in the 1990’s to stymie hostile takeovers. However, staggered elections have since fallen out of favor among ESG supporters.

Likewise, a shared CEO and chairman role is no longer considered “best practice,” despite the historical popularity of this practice. However, many of the most successful firms have had a shared CEO and chair, including Warren Buffett, Jeff Bezos, Jamie Dimon, Mark Zuckerberg, Howard Schultz, Bill Gates, and others.

Emphasizing ESG can add redundancy and complexity to decision-making, potentially diverting focus from what matters most: maximization of shareholder returns.

The Wealth-Focused Policy in Practice

The Wealth-Focused Policy is not management-aligned, but rather performance-aligned. It emphasizes:

1. Accountability: Directors are evaluated based on shareholder returns, not adherence to governance trends. Since the launch of the 2025 Wealth-Focused Policy, Egan-Jones has recommended withholding votes from directors at Russell 3000 companies approximately 25% of the time.‍
2. Flexibility: Management retains autonomy to make operational, financial, and strategic decisions.
   

Rather than enforcing “market standard practices,” the policy trusts management’s expertise to operate effectively—while maintaining a mechanism for shareholders to act when performance falters.

Executive Compensation

The policy recommends against say-on-pay proposals when executives are rewarded despite poor performance. However, it does not prescribe specific pay structures, vesting schedules, or performance metrics. Each company is unique, and boards are best positioned to design compensation plans appropriate to their circumstances.

Equity compensation and incentive stock option plans are evaluated based on the proposed level of dilution and rate of equity use. While exceeding generally accepted thresholds may be permissible, such exceptions are supported only when the equity awards are clearly tied to robust performance metrics and when the resulting shareholder returns are expected to meaningfully outweigh the dilution.¹

Capitalization

The policy supports proposals that directly return value to shareholders, such as dividends and share repurchases. Capital structure decisions—including debt-to-equity ratios and share issuances—will also generally remain at management’s discretion.

However, proposals involving significant share issuances or option repricing will receive greater scrutiny, given their potential to dilute shareholder value without compensatory returns.

Mergers & Acquisitions

When evaluating mergers and acquisitions, our primary focus is whether the proposed transaction is likely to generate sufficient marginal value for shareholders. We focus on the company’s pre-announcement market valuation and the merger consideration offered.² Under the Policy, we will not recommend against a transaction solely because it did not follow a prescribed negotiation process, provided the offer price is fair and shareholders are being compensated a sufficient premium for their equity. However, transactions that lack a go-shop period or adequate opportunity for price discovery will be subject to heightened scrutiny.³  

Shareholder Rights

The policy supports rights that enhance shareholder influence without imposing unnecessary costs on the company—such as acting by written consent or submitting shareholder proposals.⁴ The Wealth-Focused Policy also does not take a negative view towards boards where directors or executives hold a significant or majority economic or voting stake in the company.

The policy also avoids imposing rigid governance standards, such as mandatory board declassification or the elimination of dual-class share structures. With regards to dual-class share structures, the following principles are used to determine vote recommendations where applicable:

1. Multiple share classes can promote capital efficiency, benefiting investors.

2. Voting rights have a dollar value. Shareholders should therefore be appropriately compensated for reductions in voting power.

Election of Directors

Director evaluations are based on company performance over tenure, not market-standard governance metrics such as independence, tenure, overboarding, or diversity. True independence and alignment with shareholders cannot be inferred from external characteristics alone but from results.

Conclusion

Egan-Jones recognizes that clients hold diverse perspectives on proxy voting. Rather than anchoring our recommendations to a single benchmark policy, we build our reports – whether for off-the-shelf or custom policies – from the ground-up, using the first principles of the client’s chosen policy. This method ensures transparency, consistency, and alignment with our clients’ perspectives.

The Wealth-Focused Policy, like all our policies, is clearly defined and faithfully implemented to reflect these principles in practice. We hope this overview clarifies the intent and application of the Wealth-Focused Policy and demonstrates our commitment to delivering transparent and objective guidance to our clients.

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[1] This is why Egan-Jones, under the Wealth-Focused Policy, supported the 2025 CEO Performance Award for Mr. Musk at Tesla’s November 6, 2025 annual meeting. While the plan allowed for approximately 12% dilution for shareholders, the returns for shareholders significantly outweighed the dilution.

[2] This was the fundamental reason for Egan-Jones’ recommendation AGAINST the proposed all-stock acquisition of Core Scientific by CoreWeave.

[3] As was the case for Alcon’s proposed acquisition of STAAR Surgical in October 2025, which Egan-Jones recommended AGAINST.

[4] See proposal 14 at the November 6, 2025 Tesla annual meeting, where Egan-Jones, under the Wealth-Focused Policy, recommended FOR the shareholder proposal.